HONG KONG >> Japanese stocks rocketed Monday, leading most Asian markets higher after dismal growth data raised hopes of extra stimulus for the world's third-biggest economy, weakening the yen.
Chinese shares dropped on their first day of trading after a weeklong holiday that coincided with a sharp sell-off in global markets.
Japan's benchmark Nikkei 225 index rebounded from last week's slump to post its second biggest one-day gain in three years, soaring 7.2 percent to close at 16,022.58. South Korea's Kospi climbed 1.5 percent to end at 1,862.20. Hong Kong's Hang Seng was up 2.9 percent to 18,847.42. The Shanghai Composite Index in mainland China lost 0.6 percent to finish at 2,746.20 after reopening following the Lunar New Year holiday. Australia's S&P/ASX 200 rose 1.6 percent to 4,843.50. Taiwan's benchmark was flat while markets in Southeast Asia gained.
The latest data show Japan's economy shrank 1.4 percent on an annualized basis last quarter because of weak consumer demand and slower exports. It's a setback for Prime Minister Shinzo Abe's economic revival program, which aims to stoke inflation through massive monetary easing. However, the latest report also gives the government more reason to open the stimulus taps wider to restore growth, economists said.
"Together with the recent slump in the Nikkei and the appreciation of the yen, the case for additional easing remains compelling," said Marcel Thieliant of Capital Economics. He predicts the Bank of Japan will step up bond purchases and push interest rates that are already in negative territory even lower.
China bank chief
Also helping shore up investor sentiment around the region were comments from China's central bank chief in which he played down the likelihood of a one-off devaluation of the yuan. People's Bank of China Governor Zhou Xiaochuan signaled in a Caixin magazine interview published over the weekend that there was no basis for further depreciation of China's currency, providing relief for the country's exporting neighbors worried that a weakening yuan would hurt their competitiveness.
Chinese shares were also weighed down by the latest monthly trade figures. Exports fell 11 percent while imports slid by nearly a fifth, according to customs data, highlighting persistent weakness in the world's second biggest economy. Economists, however, were reserving final analysis until figures for February are out because the timing of the Lunar New Year holiday distorts China's economic data at the beginning of the year.
Major U.S. benchmarks ended last week higher, with the Dow Jones industrial average rising 2 percent to close Friday at 15,973.84. The Standard & Poor's 500 gained 2 percent to 1,864.78 and the Nasdaq composite added 1.7 percent to 4,337.51.
Benchmark U.S. crude oil futures lost 17 cents to $29.27 a barrel in electronic trading on the New York Mercantile Exchange. The contract climbed $3.23, or 12.3 percent, on Friday to settle at $29.44 a barrel. Brent crude, a benchmark for international oils, fell 9 cents to $33.27 a barrel in London.
The dollar strengthened to 113.89 yen from 113.22 yen on Friday. The euro weakened to $1.1209 from $1.1257.