Asia Markets wrap

Hong Kong: Financial markets received a boost from data that showed the world economy is on the mend with investor confidence gaining traction. This added legs to a market already lifted by trial results indicating a coronavirus vaccine could be made available to the public within this year.

Overnight, markets were already upbeat after expectations US interest rates will remain low for “some time” following the release of US Federal Reserve meeting minutes.

The Barclays Global manufacturing confidence index increased further in June, suggesting the deep downturn in the manufacturing sector may soon level off.

“The reopening of the global economy led output and new orders sentiment to pick up sharply from the March-April lows in most major production hubs,” Barclays economists Iaroslav Shelepko and Akash Utsav wrote in a note. They said stabilising domestic demand was once again the major source of improvement in the June PMI data.

“However, green shoots have now emerged in international trade as well, with new export orders improving considerably. Dynamics across Emerging Market (EM) economies were uneven, but strong prints in Brazil, Turkey, Russia and India all point to stabilising manufacturing activity.”

The Japanese Nikkei 225 benchmark rose 0.11%, Australia’s S&P ASX 200 index has climbed 1.65% and Hong Kong’s Hang Seng index soared 2.85%. China’s CSI300 index has added 2.07%.

Drugmaker Pfizer announced early positive data from an ongoing phase 1/2 study of its vaccine candidate against sars-cov-2, as the coronavirus is known. “Efforts to manufacture the leading candidates, at risk, are gearing up. In case the safety and efficacy study is successful, and the vaccine receives regulatory approval, the companies are expecting to manufacture up to 100 million doses by the end of 2020 and potentially more than 1.2 billion doses by the end of 2021,” it said in a statement. The stock climbed 3%.

The optimism was enhanced by the minutes of the US Federal Reserve’s June rate-setting committee meeting. The minutes said: “The economy is likely to need support from highly accommodative monetary policy for some time and that will be important in coming months for the committee to provide greater clarity regarding the likely path of the federal funds rate and asset purchases.” It also discussed the possibility of a modest temporary overshooting of the committee’s longer-run inflation goal.

Markets are looking ahead at the official jobs report on Thursday, which is forecast to show private payrolls jumped by another 3 million in June, according to a Bloomberg poll. Reuters expects private employers to show 2.9 new million new jobs in June.

Relentless surge

While the focus has been on the positive developments the relentless surge in coronavirus infection count continues to hover over investors’ minds.

“Just as US economic surprises had surged to a record high and earnings revisions were set to breach into positive territory during July, the high-frequency data began to question whether the war in containing the virus had been actually won,” Jefferies & Co analysts said in a note. “There is clearly a divide between those US states that have locked down and have contained the virus from those that have sought to protect their local economies by refraining from locking down and are now seeing their number of new cases rising.”

Credit markets remain firm drawing investor attention as more issuers capitalise on low rates. The Asia IG index has moved in by 4 basis points to 81/82 bps and sovereign CDS have narrowed by 2-11 basis points. Wuhan Dangdai has hired banks for a dollar bond offering with meetings set to kick off today.

ATF China Bond 50 Index: ATF indices closed mixed on PBoC easing signals

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Beijing unveils distributed ledger tech plan

Foreign Exchange: What keeps driving USD down and CNY well supported?

Asia Stocks

# Japan’s Nikkei 225 edged up 0.11%.

# Australia’s S&P ASX 200 climbed 1.65%. 

# Hong Kong’s Hang Seng index 2.85%.

# China’s CSI300 advanced 2.07%.

# The MSCI Asia Pacific index added 1.01%.

Stock of the day

The price of Semiconductor Manufacturing International Corporation stock rose by as much as 17% on the Hong Kong Stock Exchange, hitting an all-time high ahead of its listing on the Shanghai Stock Exchange Star Market. Its listing price will be determined tomorrow. 

This report appeared first on Asia Times Financial.

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Umesh Desai

Umesh Desai is Asia Times Finance Editor. Prior to his current role he was at Reuters for 19 years before which he was a credit ratings and equity research analyst. A chartered accountant by training, he is based in Hong Kong.