Asia’s major markets saw a mixed day on Tuesday as investors went in different directions responding to cues on Sino-US tensions, rising energy stocks and the AI chatbot stock frenzy.
Japan’s Nikkei share average climbed, led by energy-related companies which tracked overnight gains of their US peers, but the rises were muted as traders struggled to find other market moving signs.
The Nikkei share average edged up 0.35%, or 99.27 points, to close at 28,287.42, while the broader Topix rose 0.25%, or 5.08 points, to 2,022.76.
“The market had no clear cues so investors were selling outperforming stocks and buying underperforming ones,” said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.
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Overnight, the S&P 500 ended higher, lifted by energy stocks following surprise cuts to the OPEC+ group’s oil output. The S&P 500 energy sector index surged 4.9%
In Japan, the utility sector gained 1.46%, with Tokyo Electric Power Company Holdings climbing 2.49%. Kansai Electric Power rose 2.16%. Energy explorers, which surged 5% in the previous session, gained 0.74%.
Hong Kong shares fell, led by its technology stocks, as elevated Sino-US tensions dented investor sentiment. China shares were mixed as sustained strength in artificial intelligence-related stocks countered weakness elsewhere.
China warned US House Speaker Kevin McCarthy on Tuesday not to “repeat disastrous past mistakes” and meet Taiwan President Tsai Ing-wen, who is visiting the United States.
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Meanwhile, US President Joe Biden’s administration said on Monday it could not confirm reports that China was able to collect real-time data from a spy balloon as it flew over sensitive military sites earlier this year, saying analysis was still ongoing.
The Shanghai Composite Index gained 0.49%, or 16.16 points, to 3,312.56, while the Shenzhen Composite Index on China’s second exchange fell 0.45%, or 9.66 points, to 2,139.37.
The Hang Seng Index dropped 0.66%, or 134.59 points, to 20,274.59 dragged down by its tech stocks. Alibaba and Meituan were down 3.2% and 4.1%, respectively.
Elsewhere, in early trade, Asia markets fluctuated with Singapore, Seoul and Wellington in the green but Sydney down ahead of a Reserve Bank of Australia interest rate decision. Manila and Jakarta also fell.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4%, reversing early gains.
Oil Output Cut Fallout
Globally, investors were still grappling with inflation concerns in the wake of the surprise cuts to the OPEC+ group’s oil output targets, while treasury yields fell after frail US manufacturing data renewed anxiety about the economy.
The announcement on Sunday of output target cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, propelled oil prices higher and complicated the inflation outlook. Brent crude was last up 0.44% to $85.3 per barrel, after jumping over 6% overnight.
Investors were also assessing Monday’s economic data, which showed US manufacturing activity in March slumped to its lowest level in nearly three years as new orders plunged, and analysts said activity could decline further due to tighter credit conditions.
In early European trades, the pan-region Euro Stoxx 50 futures were up 0.33%, German DAX futures advanced 0.39% and FTSE futures rose 0.35%. US stock futures, the S&P 500 e-minis, were down 0.07%.
Market watchers have also been trying to gauge how much longer the Fed may need to keep raising interest rates to cool inflation and whether the US economy may be headed for recession.
US Dollar on Back Foot
Treasury yields retreated after the US manufacturing data, which increased expectations for some investors the Fed will cut rates later this year as the economy slows. Separate data also showed US construction spending weakened in February.
The yield on benchmark 10-year Treasury notes was last at 3.4151% compared with its US close of 3.432% on Monday.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 3.9676% compared with a US close of 3.98%.
The dollar reversed some losses but remained on the defensive after losing ground on Monday in the wake of the weak US economic data.
The US dollar index which tracks the greenback against a basket of currencies of other major trading partners, was last up at 102.16.
Key figures
Tokyo – Nikkei 225 > UP 0.35% at 28,287.42 (close)
Hong Kong – Hang Seng Index < DOWN 0.66% at 20,274.59 (close)
Shanghai – Composite > UP 0.49% at 3,312.56 (close)
London – FTSE 100 > UP 0.17% at 7,686.41 (0934 GMT)
New York – Dow > UP 0.98% at 33,601.15 (Monday close)
- Reuters with additional editing by Sean O’Meara
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