Asian markets saw a mixed start to the week with bargain-buyers moving in after positive jobs data from the US but with gains capped by the gloomy economic outlook.
Data showed US employers hired far more workers than expected in July – the 19th straight month of payrolls expansion – with the unemployment rate falling to a pre-pandemic low of 3.5%.
That news buoyed Asia investors in early sessions but advances were limited by ongoing Covid-19 outbreaks in China and simmering tensions between Beijing and Washington after last week’s controversial Taiwan visit by House Speaker Nancy Pelosi.
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Japan’s Nikkei index ended at a more than four-month high, as investors scooped up stocks that reported robust outlooks, while caution ahead of the release of US consumer prices report limited gains.
The Nikkei share average rose 0.26% to 28,249.24, its highest close since March 29. The index, which opened lower, posted a four-session winning run. The broader Topix edged 0.22% higher to 1,951.41.
Suzuki Motor surged 10.4% after the automaker reported a near 37% jump in its latest quarterly operating profit.
Investors’ focus now is on the July US consumer prices report due on Wednesday, which could see a slight pullback in headline growth, but likely a further acceleration in core inflation.
China stocks moved back and forth, with the energy sector being partially countered by losses in consumer shares.
The blue-chip CSI300 index fell 0.2% to 4,148.07, while the Shanghai Composite Index was up 0.3%, or 9.91 points, to 3,236.93, The Hang Seng index fell 0.8% to 20,045.77,
China’s Hainan, an island province dependent on tourism, locked down more areas on Monday, as it battles its worst Covid-19 outbreak after seeing very few cases over the past two years.
Stocks in tourism, transport, and consumer staples retreated, with China Tourism Group Duty Free Corp slumping 4.7%.
China Defence Shares Jump
China’s defence ministry defended its shelving of military talks with the United States in protest against House Speaker Nancy Pelosi’s visit to Taipei last week, warning that Washington must bear “serious consequences.” Defence shares jumped more than 2%.
The Hang Seng Index dropped 0.77%, or 156.17 points, to 20,045.77, while the Shenzhen Composite Index on China’s second exchange rose 0.8%, or 17.21 points, to 2,183.22.
The Hang Seng Tech Index dropped 1.8%, with e-commerce giant Alibaba Group down 4.4%.
Elsewhere across the region, risk-averse sentiment took hold with stocks in Kuala Lumpur and Singapore falling 0.7% and 0.8%, respectively. Equities in Seoul reversed early losses to edge ahead 0.1%.
Indian stocks advance with Mumbai’s signature Nifty 50 index up 0.6%, or 109.95 points, at 17,507.45.
US Dollar Drops
Globally, shares gained ground, recovering their footing after the strong US jobs report on Friday bolstered the case for more super-sized interest rate hikes, while the dollar weakened and government bond yields fell.
The MSCI world equity index, which tracks shares in 47 countries, added 0.2%, recovering losses of the same amount seen on Friday.
S&P 500 futures and Nasdaq futures were up 0.3% and 0.4%, respectively. The S&P 500 had ended lower on Friday, weighed down by tech stocks.
Yet market players still eyed risks from higher rates. “Sectors like the higher rated tech stocks are still going to come under pressure for a while until we can see the Fed funds rate coming down,” said Robert Alster, chief investment officer at Close Brothers Asset Management.
The US dollar fell 0.3% versus a basket of currencies to 106.32, giving up some gains after strengthening on the jobs boom and the jump in yields.
Oil prices recouped early losses to eke out some gains, having suffered the worst week since April on worries about stalling global demand as central banks keep tightening.
Brent rose 0.7% to $95.73, while US crude was up 0.6% at $89.55 per barrel.
Key figures
Tokyo – Nikkei 225 > UP 0.26% at 28,249.24 (close)
Hong Kong – Hang Seng Index < DOWN 0.8% at 20,045.77 (close)
Shanghai – Composite > UP 0.3% at 3,236.93 (close)
New York – Dow > UP 0.2% at 32,803.47 (Friday close)
- Reuters with additional editing by Sean O’Meara
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