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Jun 8, 2016

Asian Markets at Close Report, by MarketWatch on June 8, 2016: China Stocks Retreat as Investors Brace for Data; Japan Stocks Rise.

Chao Deng
Chinese stocks slipped Wednesday and trading was tepid across Asia, as investors braced for upcoming economic data out of China and a key decision next week by benchmark provider MSCI Inc.

The Shanghai Composite Index SHCOMP, -0.30%  finished down 0.3%. The Hang Seng Index HSI, -0.14%  closed down 0.1% after four straight sessions of gains.
Australia’s S&P/ASX 200 XJO, -0.02%  was flat, although South Korea’s Kospi SEU, +0.77%  gained 0.8%, and Japan’s Nikkei Stock Average NIK, +0.93%  rose by 0.9%.
Chinese stocks slipped after news that Chinese exports fell 4.1% in May, compared with April’s 1.8% drop. The release was better than a drop of 4.6% predicted by economists The Wall Street Journal polled.
Still, the reaction in stock markets was muted. Traders said that investors are cautious ahead of more economic releases in coming days, including data on Chinese inflation, industrial profits and new yuan loans.
“This is one bit of a stream of data that’s going to give you a picture of where China is,” Andrew Sullivan, managing director at brokerage Haitong International, said of Wednesday’s trade release. In Hong Kong, he said, “the market is kind of just treading water.”
Markets have been caught in a holding pattern, with investors reluctant to put on big trades ahead of two important events: MSCI on June 15 is expected to announce whether it will include Chinese mainland stocks to its widely tracked benchmarks.
Also next week, the U.S. Federal Reserve makes a decision on interest rates. Investors don’t expect the bank to raise its key rate, although the Fed could make comments that influence expectations on its July, September, November and December rate decisions.
Chinese stocks got a boost last week amid speculation that MSCI will announce the inclusion of A-shares traded on the mainland, but the Shanghai Composite is down 0.4% this week.
Mainland markets will be closed on Thursday and Friday for the Dragon Boat Festival, while Hong Kong’s stock market will only be closed on Thursday.
On Wednesday, trading was choppy in Japan, amid uncertainty over the pace of the U.S. economic recovery. Investors have generally been flocking to stocks of businesses serving domestic demand, and away from exporters.
But Panasonic Corp. 6752, +3.68%  rose 3.7% to 990.1 yen (US$9.25) following comments from Elon Musk, chief executive of Tesla Motors Inc. TSLA, +5.28%  , that the electric car maker is working exclusively with Panasonic for new Model 3 batteries.
Meanwhile, in Australia, a basket of energy shares climbed 2.1% following a push by crude oil CLN6, +0.91%  above $50 per barrel, but the mining-heavy materials subindex pulled back from gains in recent days. Most banks also retreated after the Reserve Bank of Australia’s decision Tuesday to leave its cash rate on hold raised doubts interest rates will be cut further any time soon.
Chinese oil stocks rose, with PetroChina Co. 601857, -0.41%  gaining 2.3%.