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Asia stocks muted as China growth revives US rate hike talk

FILE - In this Oct. 2, 2014, file photo, people pass a Wall Street subway stop, in New York's Financial District. European shares were mostly higher Monday, Oct. 19, 2015, while Chinese markets zigzagged after quarterly growth figures countered pessimism about the world's No. 2 economy. Other Asian markets ended little changed. (AP Photo/Richard Drew, File)
FILE - In this Oct. 2, 2014, file photo, people pass a Wall Street subway stop, in New York's Financial District. European shares were mostly higher Monday, Oct. 19, 2015, while Chinese markets zigzagged after quarterly growth figures countered pessimism about the world's No. 2 economy. Other Asian markets ended little changed. (AP Photo/Richard Drew, File) FILE - In this Oct. 2, 2014, file photo, people pass a Wall Street subway stop, in New York's Financial District. European shares were mostly higher Monday, Oct. 19, 2015, while Chinese markets zigzagged after quarterly growth figures countered pessimism about the world's No. 2 economy. Other Asian markets ended little changed. (AP Photo/Richard Drew, File)

By Associated Press 3 min read

BEIJING (AP) – Asian stocks were muted Tuesday after China’s better-than-expected quarterly growth figure revived expectations in financial markets for a Federal Reserve rate hike.

KEEPING SCORE: Japan’s Nikkei 225 gained 0.4 percent to 18,207.15 and the Shanghai Composite Index in mainland China rose 0.5 percent to 3,403.51. Hong Kong’s Hang Seng lost 0.6 percent to 22,929.51. South Korea’s Kospi added 0.5 percent to 2,039.35. Australia’s S&P/ASX 200 retreated 0.7 percent to 5,235.60. New Zealand, Indonesia and Thailand gained while Singapore and India declined.

CHINA GROWTH: Economic growth in the July-September quarter decelerated to 6.9 percent, its lowest level since early 2009, but barely changed from 7 percent in each of the two preceding quarters. Retail sales grew strongly but growth in factory output declined. Investors had been expecting a lower number, and some forecasts were particularly pessimistic, so the outcome was a positive for the global economic outlook.

FED EXPECTATIONS: Investors were convinced the Federal Reserve held off raising interest rates in September because it was uncertain about how much global economic growth, and China’s growth in particular, was weakening. In reality, the Fed’s main concern was low inflation in the U.S. not China or the world economy. But the fact Chinese growth didn’t collapse in the third quarter removes one argument in financial markets for interest rates to be left at record lows. Super-low rates have been a boon for stock markets for several years.

QUOTABLE: “Overnight market action was dominated by a response to Chinese GDP, retail sales and industrial production numbers,” said Michael McCarthy, chief strategist at CMC in Sydney. “A clear collective conclusion is that the stronger than expected numbers remove an impediment to U.S rate rises,” he said in a commentary. “This led to a stronger U.S. dollar, weaker commodity prices and modest gains for shares as markets weighed a better global growth scenario against potentially tighter U.S. monetary policy.”