HONG KONG (AFP) - Asian markets edged up on Friday (July 17) following an across-the-board sell-off the previous day, but disappointing recent data has jolted optimism over the economic recovery that has helped drive gains in for the past few months.
Hong Kong added one per cent and Shanghai climbed a similar amount a day after collapsing 4.5 per cent, while Sydney added 0.1 per cent and Seoul and Taipei climbed 0.7 per cent. Tokyo went into the break barely moved.
Singapore's Straits Times Index edged up 0.2 per cent as of 11:31am local time.
Traders have for weeks been able to look past fresh spikes in infections around the world thanks to trillions of dollars in government support and as they focus on the easing of lockdown measures.
But with new containment measures being reintroduced in parts of the world that had been thought to have controlled the outbreak - including Hong Kong, Japan and Australia - confidence has taken a hit.
Data out of China on Thursday showed that while the economy grew more than expected, the crucial reading on retail sales was below forecasts, indicating consumers - who are key to reigniting growth - were still reluctant to go out and spend.
Later, a report showed US retail sales continued to rise in June, but at a slower pace than May.
And new claims for US unemployment benefits last week were little changed from the previous week at 1.3 million, a historically high level. Economists fear the figure might rise again as major states including California and Texas impose fresh lockdown measures.
"Data released over the last 24 hours seriously questions the speed of any post-Covid-19 economic recovery," said Michael McCarthy, at CMC Markets. "The numbers illustrate the economic challenges posed by secondary infection outbreaks."
Markets around the world tumbled Thursday, though Asia staged a recovery in early trade.
V-SHAPED RECOVERY IN DOUBT
But observers were cautious about the outlook for the recovery in light of the surge in new infections.
"Try as one may, it's challenging to look through the makeup of China's economic recovery, which offers a roadmap to the rest of the world that is not especially bullish for one that is wholeheartedly predicated on consumer-driven recovery," said Stephen Innes at AxiCorp.
"Forget about a V, this is going to be a lengthy S-L-O-G shaped recovery," he added.
Eyes will be on Europe, where leaders will later in the day begin their first face-to-face summit in five months to discuss their US$850 billion economic rescue package.
However, while there are low expectations for an agreement this weekend, with Denmark, Sweden, Austria and the Netherlands holding out against stumping up for their southern neighbours without strict conditions, there is hope something can eventually be hammered out.
"The political support is there for a deal and the frugal four may use this summit to voice their final concerns over joint debt and grants for the weaker states," said Oanda's Edward Moya.
"Wall Street is fully expecting EU leaders to get this stimulus package done, but there is a chance it doesn't get finalised this week. A deal will be made, it just might take a couple more weeks longer."
