Kuala Lumpur, Malaysia – New figures showing Chinese manufacturers came roaring back to life in March following two months of coronavirus lockdowns gave Asian stocks a modest boost on Tuesday.
European stocks were also up in early trade, while oil prices rose.
The latest survey of China’s factory activity, the so-called Purchasing Managers Index (PMI) conducted by the National Bureau of Statistics, indicated that companies in the manufacturing sector are expanding again, after a deep contraction in February.
The recovery may be an early signal that the worst is over for the world’s second-largest economy, where the pandemic began, but the road to a full recovery remains long and arduous, analysts said.
In Japan, data released on Tuesday showed both factory output and retail sales rose in February, though the pandemic may still lead to weaker numbers in the months ahead.
“The data itself was pleasing in that it was broad-based and implies that the first countries into COVID-19, are perhaps on their way out of it,” Jeffrey Halley, senior market analyst for Asia Pacific at OANDA, told Al Jazeera. “That won’t alleviate the demand shock coming from elsewhere in the world, and any recovery will be fragile indeed, but the potential light at the end of the tunnel gave Asian investors some welcome cheer today,”
China’s benchmark Shanghai Composite share index ended the day little changed with a 0.11 percent gain, while Japan’s Nikkei 225 index lost 0.88 percent. Both markets erased early gains after the release of their respective economic figures.
Over the first quarter of 2020, the Nikkei has lost more than 18 percent of its value.
Hong Kong’s Hang Seng Index gained 1.85 percent, South Korea’s Kospi Index rose 2.19 percent, and Singapore’s Straits Times Index increased 1.99 percent.
Accelerated government efforts in South Korea and Japan to fight the pandemic and its economic fallout also buoyed investor optimism.
Japan’s government on Monday proposed a record stimulus spending package worth 100 trillion yen ($926bn) – the equivalent of up to 17 percent of the size of the Japanese economy – to insulate the country’s people from the worst of the effects of the coronavirus.
Meanwhile, South Korean President Moon Jae-in the country is planning a second round of emergency spending that will include direct payments to low-income families to help cushion the blow of the containment measures.
China’s PMI jumped to 52.0 in March, from 35.7 in February, according to data released by the National Bureau of Statistics.
The non-manufacturing PMI also rose to 52.3 from 29.6, bolstered by a recovery in the services and construction sectors.
A figure above 50 indicates businesses are expanding, while anything below that means activity is shrinking.
“The latest survey data add to a broader evidence that activity has started to rebound but suggest that weak foreign demand and labour market strains remain headwinds,” Julian Evans-Pritchard, senior China economist at Capital Economics, wrote in a note.
“A full recovery will take much longer given the deepening slump in foreign demand and the deterioration in the labour market – the employment components of the PMIs rose last month but still point to continued layoffs.”
Shares in Europe were mostly higher in early trade, with the main indices in Paris, London and Frankfurt up between 2.2 and 2.5 percent.
Meanwhile, oil prices rebounded after Brent crude nosedived to the lowest levels in 18 years on Monday amid a double whammy of a supply glut caused by a price war between top producers Saudi Arabia and Russia, and a collapse in demand as the world comes to a near standstill.
After calling the price war “crazy,” US President Donald Trump agreed with Russian President Vladimir Putin during a phone call on Monday to let their top energy officials meet to discuss the crash in oil markets. The plunge in crude prices has hurt US shale oil and gas producers because of their higher operating costs.
Brent crude futures clawed back some losses on Tuesday, rising 0.7 percent to $27.12 per barrel. US West Texas Intermediate jumped 5.43 percent to $21.16 per barrel.
Even with Tuesday’s gains, global crude prices have fallen by about 66 percent so far this year.
The coronavirus pandemic continues to take its toll on the global economy since the first cases were reported in China at the end of 2019. The virus has infected more than 784,000 worldwide, killing about 37,500 people, while some 165,000 have recovered.
The epicentre of the outbreak has shifted from China to the US, where the number of new cases has jumped to 163,500, the most in the world.
With large areas of the US under lockdown, Trump has abandoned plans to reopen parts of the economy by mid-April while Congress started to ready a fourth round of stimulus spending plans to shore up the economy and protect its people from the deepening fallout.
“Due to the severe global travel bans and lockdowns in place in many countries around the world, the global economy is expected to experience the worst recession since the Global Financial Crisis in 2020,” Rajiv Biswas, Asia Pacific chief economist at IHS Markit, told Al Jazeera.
The US, UK, Europe and Japan are expected to experience deep recessions in 2020, he said.
“However, there is some brighter news as China’s economy is showing signs of a gradual rebound in momentum in March as new COVID cases have fallen to extremely low levels, after the severe disruption of production and business activity during February,” Biswas said.
Future PMI surveys in coming months will help show the strength of China’s economic rebound, while PMI readings for other Asian countries will provide a guide to the extent of the economic shocks from the pandemic across the Asia Pacific region, he said.