China shares fell Monday amid the latest signs that the country’s factories were struggling, while stocks in Japan edged higher as the U.S. dollar was close to unchanged. The Hang Seng Index was down 0.9%, after data showed China exports posted a surprise drop in January on slack demand abroad and a strong currency at home. Imports also fell sharply partly because of weak local demand, giving the economy another big trade surplus for the month. The Shanghai Composite was recently 0.4% lower.
“Lower commodity prices were no doubt a main driver of particularly weak imports growth, but weak domestic demand growth likely exacerbated the magnitude of the slowdown,” said ING. Meanwhile, better-than-expected U.S. employment data on Friday “caused investors to bring forward their estimate of the likelihood of a June rate hike.” A later increase in U.S. interest rates would keep global markets awash in cheap money, benefiting flows to riskier assets, including stocks in Asia and emerging markets.
Pressure to Asian stocks early Monday also came from Greece, which unveiled plans Sunday to undo some austerity measures that were a condition of its international bailout, putting its future at financial risk.
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