Asian investors were in a wait-and-see mood on Tuesday with indexes ticking over ahead of this week’s US Federal Reserve meeting.
China’s markets were the outliers boosted by Beijing’s pledge of a $44 billion fund to aid its struggling property sector but elsewhere traders kept to the sidelines ahead of US growth data and a slew of US earnings reports all due out this week.
Japan’s Nikkei notched a small decline, while the broader Topix was flat, as investors kept their cards close to their chest. The Nikkei closed 0.16% lower, its second straight daily drop. Turnover, as on Monday, was light.
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“Markets are definitely in a wait-and-see mode, what you’re seeing is gentle position adjusting,” said Jeffrey Halley at brokerage OANDA in Singapore. “It’s the calm before the storm.”
Tech investor SoftBank Group Corp rose 3.2% – its biggest daily gain in about a month – after Hong Kong shares rose for one of its holdings, Chinese tech giant Alibaba. Alibaba plans to add a primary listing in Hong Kong.
Japan also upgraded its overall view on the economy for the first time in three months in July, with the government turning more positive on consumption and jobs.
China stocks rebounded as real estate developers continued to rise on news that Beijing was planning to set up a fund to aid the troubled industry.
Real estate developers jumped 5.4% in China, and mainland developers climbed 3.3% in Hong Kong, extending gains from the previous session.
The CSI300 index rose 0.8% to 4,245.98 at the close of trading, while the Shanghai Composite Index rose 0.83%, or 27.05 points, to close at 3,277.44.
Alibaba HK Primary Listing Bid
The Hang Seng Index gained 1.7%, or 342.94 points, to 20,905.88, while the Shenzhen Composite Index on China’s second exchange was up 1%, or 21.87 points, to 2,187.23. The Hong Kong China Enterprises Index gained 1.5% to 7,182.28.
The Hang Seng Tech Index rose 1.5%, with Alibaba Group up 5% to lead the gains.
Alibaba will apply for a primary listing in Hong Kong and aim to keep its US listing, while Ant Group executives are no longer part of Alibaba Partnership, the body nominate the majority of the e-commerce giant’s board.
Elsewhere across the region, stocks in Kuala Lumpur and Bangkok declined between 0.2% and 0.8%.
Taiwanese stocks were down 0.9%, a day after China delivered sterner warnings to US officials about House Speaker Nancy Pelosi’s possible visit to Taiwan.
Indian stocks slipped with Mumbai’s signature Nifty 50 index down 0.67%, or 112.10 points, at 16,518.90.
Apple, Microsoft, Amazon Earnings
Globally, investors are preparing for a likely 75 basis point rate increase by the Federal Reserve on Wednesday – with markets pricing about a 10% risk of a larger hike, as well as waiting to see whether economic warning signs prompt a shift in rhetoric.
“We are leaning to the view that 75 bps is most likely but won’t be the end unless they see some demand destruction and some tempering of inflation,” John Milroy, an investment adviser at Ord Minnett, said.
“We are fearful they have to materially slow the US economy further.”
Big technology companies such as Apple, Microsoft and Amazon.com are due to report earnings this week.
In currencies, the dollar was marginally softer but not drifting too far below recent milestone highs as uncertainty continued to swirl around the interest rate and economic outlook.
Oil prices rose further on expectations Russia’s reduction in natural gas supply to Europe could encourage a switch to crude, with Brent futures last up 1.3% at $106.45 a barrel and US crude up 1.3% at $97.92 a barrel.
Benchmark 10-year Treasury yields fell to 2.875% as growth worries gave support to bonds.
Key figures
Tokyo – Nikkei 225 < DOWN 0.2% at 27,655.21 (close)
Hong Kong – Hang Seng Index > UP 1.7% at 20,905.88 (close)
Shanghai – Composite > UP 0.8% at 3,277.44 (close)
New York – Dow <> UP 0.3% at 31,990.04 (Monday close)
- Reuters with additional editing by Sean O’Meara
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