Investing.com - Stocks in Tokyo surged on Monday as the yen weakened, but Shanghai dropped as markets in China came back online after a week-long holiday break.
The Nikkei 225 rose 6.60%, while the Shanghai Composite fell 1.57% and the S&P/ASX 200 gained 1.34%.
China reported trade data for January with exports slumping 11.2%, compared to an expected 1.9% year-on-year drop, and imports crashing 18.8%, compared to a 0.8% decline seen, for a trade balance surplus of $63.03 billion, wider than the $58.85 billion expected.
"For a start, Chinese trade growth is notoriously volatile during the first quarter due to the shifting timing of Lunar New Year which makes the monthly data less comparable with the previous year. Admittedly, we had expected the earlier timing of Lunar New Year compared with 2015 to have provided a seasonal boost to exports last month given that more of the pre-holiday rush to meet orders should have taken place in January this year. That said, the impact of these seasonal distortions can be difficult to predict," Capital Economics said in a note to clients after the data.
"Secondly, efforts to arbitrage the gap between the offshore and onshore exchange rate appear to have inflated export growth in December. As such, the slowdown in export growth in January may partly reflect the easing of this (artificial) boost to shipments – the gap between the onshore and offshore rates narrowed last month. In a similar vein, capital outflows disguised as trade flows are likely to have inflated imports at the end of last year. With policymakers having recently begun cracking down on such illicit flows, headline import growth may have been hit as a result."
Japan's GDP contracted 0.4% quarter-on- quarter, or an annualized 1.4%, in the fourth quarter, hit by sluggish consumer spending amid a slow wage recovery and uncertain growth prospects. An unexpected rise in business investment was outweighed by declines in other key components of the gross domestic product.
Markets in both the U.S. and Canada will be closed for national holidays.
In the week ahead investors will be watching U.S. inflation data for indications on whether the Federal Reserve will raise rates at all this year. As well, European Central Bank President Mario Draghi is to testify on monetary policy before the European Parliament's Economic and Monetary Affairs Committee, in Brussels.
During the break, China's central bank governor Zhou Xiaochuan said in an interview at the weekend there is no basis for continued yuan depreciation.
In an wide-ranging interview with financial magazine Caixin, Zhou spoke during a week-long holiday in China with markets shut, warning the PBOC won't allow speculators to dominate market sentiment, and downplayed concerns over the sharp decline in the country's foreign-exchange reserves over the past few months.
Also on Monday, in Japan, capacity utilization for December month-on-month is due as well as industrial production expected down 1.3%. The country reported that the tertiary industry activity index fell
Last week, U.S. stocks were higher after the close on Friday, as gains in the Financials, Basic Materials and Oil & Gas sectors led shares higher. At the close in NYSE, the Dow Jones Industrial Average gained 2.00%, while the S&P 500 index added 1.95%, and the NASDAQ Composite index gained 1.66%.