Asian stocks saw a largely positive start to the week after last week’s bounceback on the lengthening odds on a US recession, and increased bets on more economic stimulus from Beijing.
Shares across the region were lifted as the dollar slid after global equities enjoyed their best week in nine months on expectations the US economy would dodge a slowdown and cooling inflation would kick off a cycle of interest rate cuts.
The outlier was Japan, where a muscular yen impacted its exporters, dragging the Nikkei share average downwards. The Tokyo index closed 1.77% lower at 37,388.62, snapping a five-day winning run that pushed up the index 8.7% last week, while the broader Topix was down 1.40%, or 37.46 points, to 2,641.14.
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The US dollar declined broadly and slipped sharply against the yen, in particular, as investors bet on a dovish tone emerging in the Federal Reserve’s July policy meeting minutes and Chair Jerome Powell’s upcoming speech at Jackson Hole.
Chip-making equipment maker Tokyo Electron slipped 3.11% to drag the Nikkei the most. Robot maker Fanuc fell 3.23%.
Hong Kong shares advanced, driven by optimism over the US economy and by signs of government support boosting Shanghai-listed banks to record highs.
The Hang Seng Index gained 0.80%, or 139.41 points, to 17,569.57, with notable performances from banking stocks and gold miners benefiting from high bullion prices.
In Shanghai, Shares of Agriculture Bank of China surged to record highs, while China Construction Bank and Industrial and Commercial Bank of China saw substantial gains.
That helped the Shanghai Composite Index rise 0.49%, or 14.24 points, to 2,893.67, while the Shenzhen Composite Index on China’s second exchange edged back 0.10%, or 1.48 points, to 1,547.45. The blue-chip CSI300 index climbed 0.34%.
Gold mining companies including Chifeng Jilong, Hunan Gold Corp, and Zhongjin Gold also benefited from near-record bullion prices.
Kospi Dips
Elsewhere across the region, in earlier trade, Sydney, Taipei, Mumbai, Manila, Bangkok and Jakarta rose, though Seoul and Wellington dipped. Singapore was flat.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.0%, having rallied 2.8% last week.
The expectation of a softer landing for the US economy had S&P 500 futures up 0.2% and Nasdaq futures ahead by 0.3%, on top of last week’s gains. Eurostoxx 50 futures added 0.2% and FTSE futures eased 0.1%.
The Fed is hardly alone in contemplating looser policy, with Sweden’s central bank expected to cut rates this week, and possibly by an outsized 50 basis points.
In currency markets, the dollar lapsed 1.0% to 146.20 yen, and further away from last week’s top of 149.40. The euro firmed to $1.1030, just below last week’s peak of $1.1047.
A softer dollar combined with lower bond yields to help gold hold at $2,500 an ounce, and near an all-time peak of $2,509.69.
Oil prices dipped again as concerns about Chinese demand continued to weigh on sentiment. Brent fell 11 cents to $79.57 a barrel, while US crude lost 20 cents to $76.45 per barrel.
Key figures
Tokyo – Nikkei 225 < DOWN 1.77% at 37,388.62 (close)
Hong Kong – Hang Seng Index > UP 0.80% at 17,569.57 (close)
Shanghai – Composite > UP 0.49% at 2,893.67 (close)
London – FTSE 100 < DOWN 0.13% at 8,300.55 (0933 BST)
New York – Dow > UP 0.24% at 40,659.76 (Friday close)
- Reuters with additional editing by Sean O’Meara
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