Asian markets were mixed on Wednesday with Shanghai suffering a further fall, weighed down by the country’s enormous property sector collapse, but Hong Kong, Tokyo, Sydney and Mumbai all enjoyed gains.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7%, a little up from a nine-month trough hit just two sessions ago. Japan’s Nikkei also eked out a gain of 0.48% thanks to utilities and steel stocks.
Some investors were awaiting results from tech darling Nvidia to see if the sector’s lofty valuations can withstand a jump in bond yields, while still gloomy factory readings from Japan left sentiment fragile.
Data on Wednesday showed Japan’s factory activity shrank for a third straight month in August, offering the first glimpse into the health of global manufacturing this month. The United States will also report its flash PMI readings on Wednesday, which is likely to show the factory sector remained in contraction.
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The benchmark 10-year Japanese government bond yield advanced to a fresh 9-1/2-year peak of 0.675%, as investors took the Bank of Japan’s decision to refrain from intervening to buy bonds as a green light for further selling.
In China, blue chips failed to hold onto Tuesday’s gains, falling 1.34%, while Hong Kong’s Hang Seng Index held up better, rising by 0.31% at the close of trading.
Property developer Country Garden dropped 6.7% as it endures a dramatic debt crisis that will see it ejected from the Hang Seng index in early September.
Iron ore prices rose 5% to a fresh two-year high on Wednesday, and coking coal and coke were up more than 3% in the absence of Chinese government directives to cut steel production.
The Stock Exchange of Thailand also saw a rise of 0.2%, with sentiment lifted by news that the country now has a new prime minister, three months after an election and protracted wrangling over the formation of a new government.
Eyes on Nvidia, China seen dumping Treasuries
Investors are eagerly awaiting results from Nvidia due late on Wednesday. The chip company’s blockbuster report last quarter fuelled a rally in tech stocks and artificial intelligence hopes, propelling the S&P 500 this year.
Shares of Nvidia hit an all-time high of $481.87 overnight, with options data showing traders are expecting a larger-than-usual swing in shares after the quarterly results.
Analysts expect Nvidia to forecast 110% growth in third-quarter revenue to $12.5 billion. Stuart Humphrey, an analyst at JPMorgan, said some are forecasting $14-15 billion.
“This kind of number feels a touch high to me, but if it sniffs this – one could argue that into this print, it doesn’t matter if demand will eventually decline next year – (it) still will be rerated higher,” Humphrey said.
Overnight, Wall Street was pressured by higher yields which hit fresh 16-year highs. The Dow Jones fell 0.5%, the S&P 500 lost 0.3% and the Nasdaq Composite added 0.1%.
Financial shares underperformed, with the S&P 500 banks sliding 2.4%, after S&P joined Moody’s to downgrade multiple regional US lenders.
Elsewhere, Treasuries took a breather from the recent rout. Ten-year yields eased 2 basis points to 4.3062% in Asia, after touching a 16-year top of 4.3660% a session earlier.
A jump in Treasury issuance, Fitch’s credit downgrade three weeks ago and concerns China will dump Treasuries to support the yuan have added to a sell-off as investors await the Fed’s annual summit in Jackson Hole, Wyoming, later this week for more rate clues.
Comments from Richmond Fed President Thomas Barkin raised expectations that chair Jerome Powell would drive home a hawkish message, after strong US economic data makes the “re-acceleration scenario” possible.
In currency markets, moves were largely muted ahead of Jackson Hole. The US dollar was still standing strong near its two month top at 103.5 against a basket of major currencies.
The yen gained 0.2% to 145.62 per dollar, pulling further away from a nine-month trough of 146.56, amid talks that Japan will only intervene in the market if the currency plunges past 150 to the dollar.
Oil prices were slightly higher. Brent crude futures rose 0.1% at $84.09 per barrel and US West Texas Intermediate crude futures also climbed 0.1% at $79.72.
Spot gold was 0.3% higher at $1,902.68 per ounce.
- Reuters with additional editing by Jim Pollard
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