Shanghai shares up on hopes for house prices rebound ahead, Asia mixed

Investing.com - Shares in Shanghai rose slightly on Monday as investors parsed data on house prices for signs of the market ready to rebound.

The Shanghai Composite rose 0.05%, but in Sydney the S&P/ASX 200 fell 0.81% on a subdued outlook for economic recovery.

China said house prices for April year-on-year fell 6.1%, the same pace as seen in March. The data was viewed by some investors a a possible floor on falling prices.

Earlier comments that the Reserve Bank of Australia wants a prudent balance between the helpful effect of low interest rates and unintended side effects like a surge in property values by Deputy Governor Philip Lowe lifted the Aussie.

"The further reduction in the cash rate earlier this month will provide a bit more support and it will help reinforce some of the recent encouraging signs - particularly in household spending. In time stronger consumption growth and a continuation of the pick up in residential construction should lead to a lift in business investment," Lowe said.

"A lift in non-mining investment remains the critical ingredient to stronger growth in the overall economy and to a successful transition," Lowe said.

But the RBA doesn't want to engineer a boom by encouraging people to borrow large amounts against future income because debt levels are already high, Lowe said.

"So there is a fairly fine line to tread here. The RBA's recent decisions have sought to strike a prudent balance - to help encourage consumption growth and thus business investment but avoid the type of imbalances that could cause problems later on," Lowe said.

Japan said core machinery orders gained 2.6% in March, compared to an expected rise of 1.8% month-on-month and a 0.4% drop in February.

The Nikkei 225 was up 0.51% at the break.

Last week, U.S. stocks closed flat on Friday amid continuing soft economic data.

The Dow Jones Industrial Average and NASDAQ Composite index each moved by less than 0.15% on the final day of trading this week, while the S&P Composite index inched up one day after surging to an all-time record closing high. The Dow gained 20.32 or 0.11% to 18,272.56 on the session, edging up by less than 1% for the week. While the NASDAQ lost 2.51 points or 0.05% on Friday, it still closed at 5,048.29 to remain above the symbolic 5,000 level for the second straight week.

The S&P 500 gained 1.63 or 0.08% to 2,122.73, as seven of 10 sectors closed in the green.

On Friday, a fresh batch of weak U.S. economic data underlined expectations that the Federal Reserve will delay hiking interest rates until the economy is on a stronger footing.

Data showed that U.S. industrial production fell for the fifth straight month in April and another report showed that U.S. consumer sentiment deteriorated to a seven month low this month.

The Federal Reserve said industrial output slid 0.3% after a revised 0.3% decline in March. Economists had expected an increase of 0.1%.

The University of Michigan's preliminary reading of the consumer sentiment index for May came in at 88.6, down from a final April reading of 95.9 and worse than forecasts for a reading of 96.0

The reports came after disappointing data on retail sales and producer inflation earlier in the week and dampened hopes for a second quarter rebound after a sharp slowdown in growth in the first three months of the year.

In the week ahead investors will be turning their attention to Wednesday’s Federal Reserve minutes for clues on the possible timing of a rate increase. Friday’s data on U.S. inflation will also be closely watched.

Meanwhile, the euro zone is to release data on private sector activity and China is to publish preliminary data on manufacturing activity.

On Monday, Switzerland is to release a report on retail sales.

Markets in Canada will be closed for the Patriots day holiday.