Asia stocks rise with Sino-US trade talks, China data in focus

Investing.com-- Most Asian stocks rose on Monday amid optimism over high-level trade talks between China and U.S. set to take place later in the day, especially as weak Chinese inflation data underscored the impact of their trade war. 

Technology stocks were among the biggest advancers, with Chinese internet majors and South Korean chipmakers all logging strong gains. South Korea’s KOSPI outpaced its regional peers with a 1.7% rise, as it extended last week’s rally after the liberal party won the presidential election. 

Japanese stocks also clocked strong gains after first-quarter gross domestic product data was revised to show a substantially smaller contraction than initially estimated. 

Regional markets took a positive lead-in from Wall Street, which rallied close to record highs on Friday after stronger-than-expected nonfarm payrolls data highlighted some resilience in the U.S. economy.

But S&P 500 Futures ticked lower in Asian trade, reflecting increased caution before the trade talks. Key U.S. inflation data is on tap this week, as is tech major Apple Inc’s (NASDAQ:AAPL) annual Worldwide Developers Conference. 

Chinese shares rise ahead of trade talks, but weak data weighs

China’s mainland Shanghai Shenzhen CSI 300 and Shanghai Composite indexes added about 0.3% each on Monday, while Hong Kong’s Hang Seng index soared 1.5% on strength in tech. 

China’s foreign ministry confirmed high-level trade talks with the U.S. will take place in London on Monday, coming less than a week after President Xi Jinping and U.S. President Donald Trump held a rare, direct call.

Markets hoped that the talks will yield further deescalation in the U.S.-China trade conflict, after both sides agreed to slash their respective trade tariffs in mid-May, albeit temporarily.

Investors are now holding out for a more lasting agreement.

But sentiment towards China was dulled by soft inflation data, which showed sustained weakness in local spending, likely caused by the trade war. Consumer price index inflation shrank for a fourth straight month, albeit slightly less than expected, while producer price index inflation fell more than expected.

Chinese trade data also underscored headwinds for the country, although the country’s trade balance grew more than expected in May. But growth in exports missed expectations, while imports shrank substantially more than expected. 

Japan’s Nikkei rises on upbeat GDP revision

Japan’s Nikkei 225 index rose 1% and the TOPIX added 0.6%, after a positive revision in Q1 GDP data.

The reading now showed GDP remained steady from the prior quarter, and logged a smaller than initially estimated year-on-year contraction. The reading was buoyed by an upward revision in private consumption in the first quarter, although capital expenditure was slower than initially estimated.

Still, the GDP data underscored some resilience in the Japanese economy despite increased trade headwinds. Japanese officials are engaged in high-level negotiations with the U.S., and have so far maintained their demand that Japan be exempt from all U.S. tariffs. 

Broader Asian markets were also largely upbeat, as investors looked to a further deescalation in the U.S.-China trade war. 

Singapore’s Straits Times index added 0.2%, while Gift Nifty 50 Futures for India’s Nifty 50 index rose 0.1%, pointing to a positive open. Indian shares had advanced on Friday after the Reserve Bank of India slashed interest rates by a bigger-than-expected margin, flagging softer inflation and potential risks to economic growth. 

Focus in India is also on shares of HDFC Bank Ltd (NSE:HDBK), after CEO and Managing Director Sashidhar Jagdishan was accused of financial fraud by a prominent hospital trust. 

Australian markets were closed for a holiday.