Asian shares firm after Wall Street records; China GDP awaited

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By Andrew Galbraith

SHANGHAI (Reuters) – Asian shares inched higher on Friday after global stock indexes and Wall Street posted more records, with strong corporate earnings and upbeat U.S. economic data adding to optimism after China and the U.S. signed a partial trade deal.

But investors will be closely watching key Chinese economic data for clues on whether a marked slowdown in the world’s second-largest economy is starting to bottom out.

China is expected to post its weakest annual growth rate in 29 years — 6.1% — due to anemic domestic demand and the damaging trade war with the United States.

Data in the last few months have pointed to an improvement in Chinese manufacturing and business confidence as trade tensions eased, but analysts are not sure if the gains can be sustained and Beijing is widely expected to roll out more stimulus measures.

Fourth-quarter and 2019 gross domestic product (GDP) data and December factory output, retail sales and fixed-asset investment numbers are due at 0200 GMT.

In early trade before Chinese markets opened, MSCI’s broadest index of Asia-Pacific shares outside Japan () was up 0.19%, taking gains for the month to 3.4%.

Australian shares () were up 0.49% after setting four consecutive record closing highs in previous days. Japan’s Nikkei () added 0.55%.

MSCI’s global share index () inched up 0.05%, just off new record highs set earlier in the session.

But analysts say global equities may find it difficult to maintain momentum from their recent rally as optimism over the U.S-China trade truce gives way to uncertainty over the next steps in trade talks.

While the Phase 1 deal is seen as defusing the 18-month row that has hit global growth, experts say it is unlikely to provide much balm for broader frictions between the two countries. Most of the tariffs imposed during the dispute remain in place and a number of thorny issues that sparked the conflict are still unresolved.

“The challenge from here is how long we can maintain these improvements,” said Steven Daghlian, market analyst at CommSec in Sydney.

“Speaking of the market specifically, a 6% gain in two weeks is obviously a massive challenge to replicate in the tail end of the month. You don’t really see 10, 11, 12% improvements over the course of a month without any gigantic positive catalysts.”

In the U.S. on Thursday, a combination of upbeat earnings from Morgan Stanley (NYSE:), rising U.S. retail sales, a strong labor market and robust manufacturing data helped to lift Wall Street to record highs. ()

The Dow Jones Industrial Average () rose 0.92% to 29,297.64, the S&P 500 () gained 0.84% to 3,316.81 and the Nasdaq Composite () added 1.06% to 9,357.13.

The U.S. data also supported the dollar, which held steady on Friday. The greenback was up 0.05% against the yen at 110.19. while the euro inched 0.02% higher to buy $1.1137.

The (), which tracks the greenback against a basket of six major rivals, was flat at 97.320.

The rally in equities was mirrored in U.S. benchmark , which saw yields tick up to 1.8214% from their close on Thursday at 1.809%. Yields rise as prices fall.

U.S. West Texas Intermediate crude futures () were 0.17% higher at $58.62 per barrel, while gold shed 0.07% to $1,551.50 per ounce on the spot market. [/GOL]