Asia’s major stock indexes posted a mixed day of results on Tuesday as investors reacted to poor data out of China but positive earnings reports out of Japan.
Traders were also squaring their positions ahead of a key US inflation report through there was some optimism over the banking sector with signs it may not be headed for a wider crisis.
Japanese shares rallied, sending the benchmark Nikkei gauge to its highest close in 16 months, led higher by steelmakers on upbeat corporate earnings.
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Shares of JFE Holdings Inc jumped 14.5%, the steepest gain in 14 years, after Japan’s second-biggest steelmaker forecast a profit surge as auto demand recovers.
The Nikkei climbed 1.01% to 29,242.82, the highest closing level since January 2022. The broader Topix rose 1.27% to 2,097.55, its highest since September 2021.
Steelmakers and wholesale trading companies were the top performers among the Tokyo Stock Exchange’s 33 industry sub-indexes.
Results from heavyweights Toyota Motor Corp on Wednesday and SoftBank Group Corp on Thursday will be the next major cues for whether the positive earnings momentum will continue.
However, China stocks slumped after trade data fell short of expectations. The country’s imports contracted sharply in April, while exports grew at a slower pace, reinforcing signs of feeble domestic demand despite the lifting of Covid curbs.
Financial stocks, however, bucked the trend, with securities shares up 4.6%. Most banks and brokerages in the country are state-owned enterprises.
Tencent, Meituan Drag on Hong Kong
China International Capital Corp Ltd, Everbright Securities Co Ltd, and China Galaxy Securities Co Ltd jumped 10%, hitting the daily upper circuit limit.
The Shanghai Composite Index fell 1.10%, or 37.33 points, to 3,357.67, while the Shenzhen Composite Index on China’s second exchange slid 1.17%, or 23.86 points, to 2,023.06.
Hong Kong shares were down dragged by technology stocks with Tencent and Meituan down 1.9% and 1.1%, respectively.
The Hang Seng Index slumped 2.12%, or 429.45 points, to 19,867.58, while the China Enterprises Index slipped 0.6%.
Elsewhere across the region, in early trade, there were also losses in Seoul, Singapore, Wellington and Jakarta, though Mumbai and Taipei rose.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.25%, erasing part of Monday’s 0.9% rally.
US Debt Ceiling Stand-Off
Globally, US S&P 500 E-mini futures signalled a 0.1% decline at the reopen after the equity benchmark ended little changed on Monday.
Investors are keenly focused on Wednesday’s US consumer inflation report after Federal Reserve Chair Jerome Powell said last week that policy decisions will be “driven by incoming data”, while signalling a likely pause in the rate hiking cycle.
At the same time, Friday’s robust payrolls report prompted investors to dial back expectations for the timing and size of the Fed’s first rate cut. Money markets currently expect two quarter-point rate cuts by year-end, with a risk of a third.
And the the debt ceiling stand-off in the US is another reason for caution, with warnings that a failure to lift the debt limit would cause a huge hit to the US economy and weaken the dollar as the world’s reserve currency.
The dollar index, which measures the currency against six major peers, was little changed at 101.44 after climbing overnight from near the bottom of its trading range since the middle of last month.
The 10-year Treasury yield eased off a one-week high in Tokyo to last sit just below 3.5%.
Oil prices slipped, paring strong gains from the previous two sessions. Brent crude was down 30 cents at $76.71 and US West Texas Intermediate (WTI) crude fell 26 cents to $72.90.
Key figures
Tokyo – Nikkei 225 > UP 1.01% at 29,242.82 (close)
Hong Kong – Hang Seng Index < DOWN 2.12% at 19,867.58 (close)
Shanghai – Composite < DOWN 1.10% at 3,357.67 (close)
London – FTSE 100 < DOWN 0.30% at 7,755.38 (0937 GMT)
New York – Dow < DOWN 0.17% at 33,618.69 (Monday close)
- Reuters with additional editing by Sean O’Meara
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