Asian stocks saw a mixed day on Wednesday with bargain buyers lifting prices in some corners, while geopolitical tensions and China’s struggles dominated the mood elsewhere.
There was positive news out of the US where the dollar wobbled after weak labour data bolstered bets that the Federal Reserve was likely done with its interest rate hikes campaign.
Japan’s Nikkei share average closed at a three-week high as investors bought back beaten-down stocks and an overnight rally on Wall Street lifted sentiment.
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The Nikkei ended 0.33% higher at 32,333.46, its highest close since August 10, after rising for a third session. The broader Topix rose 0.43% to 2,313.38.
The banking sector jumped 1.41% to become the top performer among the Tokyo Stock Exchange’s 33 industry sub-indexes.
China stocks were roughly flat, with the market weighing geopolitical risks and factors that could affect its ailing property market.
China’s embassy in Washington on Tuesday defended its business practices after US Commerce Secretary Gina Raimondo said US firms told her that China had become “uninvestible”.
August has seen foreign capital net selling via the northbound trading link at over 83 billion yuan ($10.97 billion) so far, set to log the biggest monthly outflow on record.
The Shanghai Composite Index rose 0.04%, or 1.25 points, to 3,137.14, while the Shenzhen Composite Index on China’s second exchange gained 0.37%, or 7.25 points, to 1,958.88.
Tech stocks traded in Hong Kong were up nearly 2%, but had erased those gains by the lunch break, despite Chinese American Depository Receipts (ADRs) trading higher in New York as online retailer Pinduoduo’s earnings posted a positive surprise.
The Hang Seng Index was down just 0.01%, or 1.17 points, to 18,482.86.
Elsewhere across the region, in earlier trade, Sydney, Seoul, Singapore, Mumbai, Taipei, Manila and Jakarta were all up.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose as much as 1% to touch its highest since August 14, before easing to a gain of 0.53%. The index though is down about 6% so far in August and set for its worst monthly performance since February.
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Futures indicated the mostly good mood was set to continue in Europe. The Eurostoxx 50 futures rose 0.39%, German DAX futures were up 0.29% and FTSE futures were up 0.31%.
Overnight, Wall Street ended sharply higher, while Treasury yields slid to three-week lows after data showed US job openings dropped to the lowest in nearly 30 months in July, signalling easing labour market pressures.
“ ‘Bad news is good news,’ as the data supported bets for a sooner end of the Fed’s hiking cycle despite the recent hawkish rhetoric of Fed Chair Powell,” Tina Teng, markets analyst at CMC Markets, said in a note.
With the Fed highlighting that the interest rate path will be heavily dependent on data, traders are tweaking their bets based on the latest indicators.
Markets are pricing in an 89% chance of the Fed standing pat at its meeting next month, the CME FedWatch tool showed, and are now pricing in a 50% chance of another pause at the November meeting compared with a 38% chance a day earlier.
A much clearer economic picture will likely be revealed later in the week when US payrolls and personal consumption expenditure reports are due.
US Treasury yields were stable in Asian hours. The two-year yield, which typically moves in step with interest rate expectations, was up 3.3 basis points at 4.923%, easing away from the three-week low of 4.871% it touched on Tuesday.
Against a basket of currencies, the dollar inched up 0.077% to 103.63 after slipping nearly 0.4% on Tuesday.
The yen weakened 0.23% to 146.24 per dollar and remained at levels that last year led Japanese authorities to intervene in the currency market.
US crude rose 0.47% to $81.54 per barrel and Brent was at $85.74, up 0.29% on the day. Both benchmarks rallied more than a dollar a barrel on Tuesday on a soft dollar.
Key figures
Tokyo – Nikkei 225 > UP 0.33% at 32,333.46 (close)
Hong Kong – Hang Seng Index < DOWN 0.01% at 18,482.86 (close)
Shanghai – Composite > UP 0.04% at 3,137.14 (close)
London – FTSE 100 > UP 0.20% at 7,479.82 (0933 BST)
New York – Dow > UP 0.85% at 34,852.67 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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