Asia markets higher; ASX up 0.6%, HSI up 0.5% – CNBC

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Before market open, Japan released a slew of economic data that gave mixed signals. Household spending for January was down 3.1 percent on-year in price-adjusted real terms. The drop was steeper than the forecast for a 2.7 percent decline from a Reuters poll of economists. On the other hand, the seasonally adjusted unemployment rate in January dropped to 3.2 percent, better than the market expectation for 3.3 percent.

The yen maintained its strength against the dollar, remaining in the 112 handle. The pair traded down 0.26 percent at 112.40 as of 11.38 a.m. HK/SIN time. Exporters were mostly down, with Sony down 1.13 percent and Honda erasing losses to climb 0.47 percent. Usually, a stronger yen is a negative for exporters as it reduces overseas profits when converted into local currency.

Data on the mainland was also concerning. Chinese government data showed activity in large factories contracted for the seventh straight month in February. The official manufacturing Purchasing Managers’ Index (PMI) was at 49.0, lower than the market’s forecast of 49.3. January’s official manufacturing PMI reading was at 49.4. China’s official services PMI fell to 52.7 in February, from 53.5 in January.

The China Caixin manufacturing PMI, which tracks activities in smaller and medium-sized firms and is released after the official report, came in at a five-month low of 48.0 in February, down from 48.4 in January.

There were no wild swings in Asian equities following the release of the economic data from Japan and China. But analysts caution that the rally in risk assets is looking tired.

Singapore’s DBS bank said in a note on Monday, “The global rally in risk assets could run out of fuel soon.”

The note suggested chart readings, or technicals, which had been supporting the risk-asset rally from early February, are turning ambivalent, and out of steam.

“Optimists might hold out for supportive policies or communication from the European Central Bank’s (ECB) 10 March policy meeting. And there is also the U.S. Federal Reserve’s Federal Open Market Committee (FOMC) meeting on 15-16 March. But short of anything dramatic, risk asset markets are likely to resume downwards,” the note added.

Adding to that, the lack of direction for the economy and markets from last weekend’s G-20 meeting in Shanghai has some skeptics seeing “the meeting’s statement as an implicit admission of the failure of monetary policy,” DBS said.

Asia markets higher; ASX up 0.6%, HSI up 0.5% – CNBC}