By Swati Pandey
SYDNEY (Reuters) – Asian equities rallied on Monday as investors took a deep breath after encouraging Chinese data suggesting that the world's second-largest economy is beginning to stabilize thanks to stimulus from Beijing.
Economic growth in the second quarter slowed to 6.2% in the second quarter compared to the previous year. This was the weakest pace for at least 27 years. Separate data showed that the country's industrial production and retail sales slightly outperformed forecasts.
The Promising Month According to analysts, many stimulus measures from China have been able to shore up domestic activity and offset part of the damage from a protracted trade war with the United States.
The stock markets were uneasy in the wake of the crisis, Chinese data, some of which expected that Beijing could give more impetus.
MSCI's broadest index for Asia-Pacific equities outside Japan posted losses that were 0.2% higher at 526.72 points. It fell slightly more than 1
Trading was expected to be easy as Japan was closed on a holiday.
Australian equities fell 0.4%, while South Korea's KOSPI largely fell. Chinese equities offset early losses, with the blue chip index up 0.4%. Hong Kong's Hang Seng Index gained 0.3%.
"Investors could reduce expectations of today's data as fiscal measures seem to be taking effect," said Westpac analyst Frances Cheung.
"We believe, however, that PBoC will succeed." Expect returns to be stable and a temporary downward movement by swaps to be reflected. "
Later in the week, US retail sales and industrial production data will continue to provide evidence of the health of the world's largest economy, with the US Federal Reserve releasing its" Beige Book "on Wednesday, after comments on the implications
In the foreign exchange markets, the Australian dollar has often played a liquid proxy for the Chinese yuan, jumping to a high of $ 0.7033 after data, a level unseen since July 4
The greenback was slightly higher against a basket of major currencies at 96.871, with the dollar falling three consecutive days as markets fully priced in the opportunity to cut interest rates by 25 basis points (bps) on US interest rates a low probability of a cut of 50 basis points.
It was moving against the Japanese yen The dollar has rallied 108.04 from its lowest level since the beginning of June, while the single currency edged down slightly after three consecutive uptrends at $ 1.1267.  The expectation that the Fed will continue to support interest rates has led to ten-year US Treasury bonds below the current interest rate range of 2.25% to 2.50%.
"The rhetoric of the Dovish Fed has led to a rate cut in July, as a consummate fact: it's not whether they cut, but how much," said Morgan Stanley strategist Hans Redekar to the client in a note.
Redekar said the bank would resume its short dollar / long yen position.  "If markets are disappointed, the yield curve is likely to flatten, the USD will strengthen, and financial conditions will tighten, which would compound the already significant headwind for the global economy."
"Global reflation requires a weaker USD to bolster world trade and commodity prices."
Concerns over global growth and low inflation have led investors to stack money into bonds and money market funds, Jefferies said its Global Asset Fund Flow Tracker.
"The danger is that with a mountain of cash parked in money market funds, a truce would result in a huge shift away from safe assets," said Sean Darby, Jefferies & # 39; global equity strategist.
"At the moment, investors do not seem in a hurry to buy stocks – earnings revisions have not bottomed out yet economic surprises have been rare," he added, adding 31 cents to $ 59.90 a barrel. Brent crude lost 22 cents at $ 66.50.
Gold slipped to $ 1,410.01 an ounce, slipping from its most recent six-year high of $ 1,438.60.