ASX gains limited after China, Japan market performances

Concern about a slowing Chinese economy and inflation in Japan have sapped investor confidence on the Australian share market.

Gains were limited after data showed China’s factories reduced their output from a surge of 14.1 per cent in March to 9.8 per cent in April.

China had been one of the leaders in economic recovery from the COVID-19 pandemic.

Steelmakers’ demand for Australian export of iron ore recently had the commodity trade at more than $US260 per tonne.

Any slowdown could greatly affect miners’ profits.

China’s retail sales significantly missed expectations, contributing to ASX indices easing during trade.

The benchmark S&P/ASX200 index closed higher by 9.4 points, or 0.13 per cent, to 7023.6 on Monday.

The All Ordinaries closed up 16.4 points, or 0.23 per cent, to 7255.8 points.

China’s economic data was not the only set that may have troubled investors.

Japan’s producer price index for April showed inflation higher than expected.

“Even a perenially low-growth country like Japan is beginning to see inflation,” Deep Data Analytics chief executive Mathan Somasundaram said.

“That inflation can flow through to the US, because those producers export to the US.”

Investors, particularly those in the US, have this year worried about inflation as economies rapidly recover following lengthy lockdowns.

This is despite US and Australian central banks’ assurances that rate rises will not happen this year.

On the ASX, information technology gained most, 1.16 per cent.

Accounting software provider Xero was up 5.56 per cent to $118.75.

Energy shares were next best, higher by 1.05 per cent.

Fuel providers Ampol and Viva Energy will retain refineries at Brisbane and Geelong after the federal government pledged funding to ensure fuel continues to be produced in Australia.

The companies said the refineries would stay online until at least mid-2027 as long as the funding of about $2.3 billion is provided.

The refineries are the only two left in Australia. Competition from Asia has prompted fuel manufacturers to stop production and import the goods.

Ampol shares were higher by 6.09 per cent to $27.51.