Asia’s major stock indexes painted a mixed picture on Tuesday with Chinese and US factory data, doubts over Beijing’s stimulus plans and an under-pressure yen all having an impact on sentiment.
Chinese and Japanese stocks were flat while Hong Kong rose as the dollar firmed, keeping the yen rooted near the 152-per-dollar level that has traders worried about possible intervention, while expectations the Federal Reserve was close to cutting interest rates faded.
Japan’s Nikkei share average edged higher, briefly scaling 40,000 points before profit-taking and the risk of currency intervention by Japanese authorities hemmed in gains.
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The Nikkei share average edged up 0.09%, or 35.82 points, to close at 39,838.91, while the broader Topix was down 0.25%, or 6.77 points, to 2,714.45.
Technology-related stocks received a tailwind from their US peers as the AI frenzy continued to boost the US semiconductors index.
Along with profit-taking, the index’s gains were also capped as the risk of currency intervention lingered. That’s created a “heightened sense of caution” in the market, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.
“If the yen were to appreciate rapidly due to intervention, there is a strong possibility that the Nikkei could fall.”
Japanese Finance Minister Shunichi Suzuki said on Tuesday that authorities were ready to take appropriate action against excessive currency market volatility, without ruling out any options.
Chinese stocks were largely subdued, as investor sentiment was muted after clocking their biggest daily gain in a month on Monday aa the latest manufacturing activity data signalled the country’s economic recovery is gaining traction.
China’s blue-chip CSI 300 index slipped 0.42%, while the Shanghai Composite Index lost 0.08%, or 2.42 points, to end at 3,074.96. The Shenzhen Composite Index on China’s second exchange dropped 0.53%, or 9.55 points, to 1,779.69.
The financial sub-index edged down 0.08%, consumer staples fell 0.48%, the real estate index was down 2.54% and the healthcare sub-index declined 1.2%.
US Manufacturing Boost
Hong Kong stocks rose, led by energy and technology shares which enjoyed a post-holiday boost as traders returned after the Easter break.
Chinese H-shares listed in Hong Kong rose 2.62% to 5,962.8, while the Hang Seng Index was up 2.36% at 16,931.53.
Elsewhere across the region, in earlier trade, Seoul, Singapore and Taipei stayed in positive territory but Sydney, Wellington, Manila, Mumbai, Bangkok and Jakarta slipped.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.65% higher, mainly due to the boost from Hong Kong stocks.
Data on Monday showed US manufacturing grew for the first time in 18 months as production rebounded sharply and new orders increased, highlighting the strength of the economy and casting doubts on the timing of Fed rate cuts.
The robust manufacturing data sent yields on US Treasuries higher, with two-year and 10-year yields climbing to two-week peaks, boosting the dollar.
Futures indicated European stock markets were set for a subdued open, with Eurostoxx 50 futures up 0.10%, German DAX futures up 0.02% and FTSE futures 0.07% higher.
Yields Lift US Dollar
The yield on 10-year Treasury notes eased to 4.309% on Tuesday, having touched a two-week high of 4.337% in the previous session.
The two-year US Treasury yield, which typically moves in step with interest rate expectations, was down 2.5 basis points at 4.693%, not far from the near two-week high of 4.726% touched in the previous session.
The elevated yields broadly lifted the dollar, with the euro down 0.11% to $1.0731 and sterling last at $1.2541, down 0.07% on the day.
Against a basket of currencies, the dollar was 0.048% higher at 105.05, just shy of the 18-week high of 105.07 it touched on Monday after the stronger-than-expected manufacturing data.
Markets are now pricing in a 61% chance of the Fed cutting rates in June, compared with 70% a week earlier, according to the CME FedWatch Tool. They are also pricing in 68 basis points of cuts this year.
In commodities, US crude rose 0.51% to $84.14 per barrel and Brent was at $87.85, up 0.49% on the day, aided by signs of improved demand and rising Middle East tensions.
Spot gold added 0.3% to $2,256.46 an ounce, after hitting an all-time high of $2,265.49 on Monday.
Key figures
Tokyo – Nikkei 225 > UP 0.09% at 39,838.91 (close)
Hong Kong – Hang Seng Index > UP 2.36% at 16,931.52 (close)
Shanghai – Composite < DOWN 0.08% at 3,074.96 (close)
London – FTSE 100 > UP 0.58% at 7,998.83 (0933 GMT)
New York – Dow < DOWN 0.60% at 39,566.85 (Monday close)
- Reuters with additional editing by Sean O’Meara
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