Stock market today: Asian shares turn lower after China economic data weaker than expected

Asian shares were mostly higher on Tuesday even though the latest data showed China's economy is weaker than expected, with domestic demand failing to bounce back as much as hoped for after the pandemic.

Benchmarks advanced in Tokyo, Hong Kong and Seoul but fell in Shanghai and Sydney.

China's economic recovery after the pandemic faces pressure from sluggish consumer and export demand, a government official said Tuesday, with retail sales and other activity in April weaker than expected.

Retail sales rose 18.4% over a year earlier, up 7.8 percentage points from March, official data showed. Other indicators were mixed: Factory output rose 5.6% over a year ago but was off 0.5% from March. Investment in factories, real estate and other fixed assets was up 4.7% in the first four months of 2023, but that was off 0.4 percentage points from the first quarter's growth rate.

"Today's activity data suggest China is mired in an extended soft patch," said Stephen Innes of SPI Asset Management in a report.

Julian Evans-Pritchard of Capital Economics said the post-pandemic recovery was likely to "fizzle out" in the second half of the year. "Meanwhile, the challenging global picture will prevent much pick-up in Chinese exports," he said.

Tokyo's Nikkei 225 index surged 0.7% to 29,842.99, continuing a climb toward its highest level since the early 1990s that has been helped by strong corporate earnings and signs that inflationary pressures might be easing.

The Hang Seng in Hong Kong fell 0.2% to 19,945.86, while the Shanghai Composite index lost 0.5% to 3,292.99.

In Seoul, the Kospi edged 0.1% lower, 2,477.14, while Australia's S&P/ASX 200 slipped 0.4% to 7,240.90.

On Monday, the S&P 500 rose 0.3% to 4,136.28 and the Dow Jones Industrial Average edged 0.1% higher, to 33,348.60. The Nasdaq composite climbed 0.7% to 12,365.21.

Some of the sharper moves came from companies announcing takeovers of rivals, including a 9.1% drop for energy company Oneok after it said it's buying Magellan Midstream Partners. Magellan jumped 13%.

But market was relatively quiet as several concerns dragged on sentiment.

A chief one is the fear of a recession hitting later this year, mainly because of high interest rates meant to knock down inflation. Cracks in the US banking system and the US government's inching toward a possible default on its debt as soon as June 1 are added worries.

So far, a resilient job market has helped US households keep up their spending despite all the pressures. That in turn has offered a powerful pillar to prop up the economy. On Tuesday, the government will show how much sales at retailers across the country grew last month.

Several big retailers — Home Depot on Tuesday, Target on Wednesday and Walmart on Thursday — will give updates on their earnings in the first quarter of the year.

The majority of companies in the S&P 500 have topped expectations so far but overall they are on track to report a drop of 2.5% in earnings per share from a year earlier. That would be the second straight quarter they've seen profit drop, according to FactSet.

Looming ahead is the risk of the federal government's first-ever default if Congress doesn't raise the credit limit set for federal borrowing.

Most investors expect Democrats and Republicans to come to a deal, simply because the alternative would be so disastrous for both sides. US Treasurys form the bedrock of the global financial system because they're seen as the safest possible investment on the planet.

But one worry is that politicians may not feel much urgency to reach an agreement until financial markets shake sharply to convince them of the importance.

In other trading Tuesday, US benchmark crude oil picked up 32 cents to $71.43 per barrel in electronic trading on the New York Mercantile Exchange. It gained $1.07 on Monday, to $71.11 per barrel.

Brent crude oil, the international pricing standard, gained 33 cents to $75.55 per barrel.

The dollar slipped to 136.01 Japanese yen from 136.12 yen. The euro rose to $1.0881 from $1.0875.