Asia Markets wrap

Hong Kong: Mainland Chinese stocks advanced, outperforming the Asia Pacific region after data showed the world’s second-largest economy kept expanding for the fifth straight month.

But rising infections in Japan and Australia weakened their stock markets.

China’s Purchasing Managers Index (PMI) readings point to steady recovery momentum in July despite the floods along the Yangtze River and some local second waves of Covid-19, Ting Lu, Chief China Economist at Nomura, said.

The National Bureau of Statistics (NBS) published a PMI reading of 51.1 in July, up from 50.9 in June with all sub-indexes suggesting stronger growth momentum in the manufacturing sector.

The data “signalled a continued recovery in factory activity, at a faster pace than in June and also above expectations,” Goldman Sachs analysts said in a note but warned that “recovery pace is still uneven however, as smaller-sized manufacturing enterprises still lag behind larger enterprises.”

China’s CSI 300 advanced 0.84% but Hong Kong’s HIS benchmark fell 0.47% retreating in line with the rest of the region.

“We expect China’s official manufacturing PMI to remain at around 51.0 in coming months, with risks slightly to the downside,” Nomura’s Lu said.

Stocks in Japan, Australia down

Stocks in Australia and Japan tumbled amid the spike in coronavirus infections. The Nikkei 225 slid 2.82% and the S&P ASX 200 fell 2.04%. Japanese stocks were also rattled by Q2 earnings disappointments and the strong yen, a traditional safe haven.

Asian credit markets remain firm with the Asia IG index moving in 2 basis points to 72/73 bps and investors awaiting the busy pipeline to resume flowing after Redco Properties bonds priced at a yield of 12.875% after orders exceeded $1 billion.

The dollar continued to retreat amid worries about the passage of the stimulus bill and fell to 92.69 against a basket of currencies. Safe havens were well bid with the US 10-year Treasury at 0.54% and gold hovering above $1,960 per ounce.

“Gold looks like it has stalled, but hardly corrected given its significant rise. It still has plenty to support it,” said James Steel, HSBC chief precious metals analyst.

“The Fed said yesterday that it is ready to do more, but the onus is on fiscal policy in many countries. In the US, White House Chief of Staff Mark Meadows said they are ‘nowhere close’ to a deal on fresh US fiscal stimulus. These issues support bullion. The Covid-19 pandemic also continues to move across the world creating uncertainty.”

In the week ahead, besides the US non-farm payrolls, central bank decisions in UK, Australia, India, Russia and Thailand will be closely watched. GDP statistics for Indonesia and the Philippines, trade data for the US, China, Brazil, Australia, Taiwan, Germany and France, as well as industrial production numbers for Germany, Italy, Spain and Malaysia will also be tracked.

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Asia Stocks

# Japan’s Nikkei 225 tumbled 2.82%

# Australia’s S&P ASX 200 slid 2.04% 

# Hong Kong’s Hang Seng index dipped 0.47%

# China’s CSI300 added 0.84%

# The MSCI Asia Pacific index retreated 1.92%.

Stock of the day

China property developer KWG Group rose as much as 12.7% as a bullish block trade of 459,500 shares took place, taking the day’s volume to an 8-month high.

This report appeared first on Asia Times Financial.

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