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Asian Markets Risen Despite Optimism On Economic Data, Earnings

 

  • TOKYO — Asian shares mostly rose Thursday as investors welcomed encouraging economic data and quarterly earnings reports from big companies.

Jitters eased over the visit of U.S. House Speaker Nancy Pelosi to Taiwan after she left for South Korea and then later Japan, firm U.S. allies for decades. But analysts said some geopolitical risks remain, with China conducting military exercises near the self-ruled island that it claims as its own territory.

“Despite the easing in immediate concerns, investors will be looking out for any potential escalation in U.S.-China tensions, with any economic sanctions from China likely to negatively affect risk sentiment and positioning in Asian markets,” said Anderson Alves of ActivTrades.

Alves said investors are also watching U.S. nonfarm payrolls, due Friday, for indications on hiring, and how that might affect interest rate policy. But overall Pelosi’s trip so far has had little impact on markets.

Japan’s benchmark Nikkei 225 NIK, +0.69% added 0.6% in morning trading. Australia’s S&P/ASX 200 XJO, -0.01% gained 0.2% and South Korea’s Kospi 180721, +0.47% added 0.3%. Hong Kong’s Hang Seng HSI, +2.06% rose 1.3%, while the Shanghai Composite SHCOMP, +0.80% edged up 0.2%. Stocks fell in Taiwan Y9999, -0.51%, but advanced in Singapore STI, +0.55% and Indonesia JAKIDX, +0.15%.

On Wall Street, the S&P 500 SPX, -0.13% rose to 4,155.17, an almost two-month high. The Nasdaq COMP, +0.15% gained 2.6% to 12,668.16. Both indexes more than recouped losses earlier in the week. The Dow Jones Industrial Average DJIA, -0.29% rose 1.3% to 32,812.50.

Technology companies, retailers and communications companies were some of the biggest winners. Only energy sector stocks fell, dragged down by lower oil prices.

Investors cheered a report on the services sector, which makes up the bulk of the U.S. economy. The sector grew faster than expected in July, according to the Institute for Supply Management. A separate report showed U.S. orders for big-ticket, durable goods increased more than expected in June.

Some weak recent data on the economy heightened speculation that the peak for inflation and for the Federal Reserve’s aggressive rate hikes may be approaching or has already passed. The weak data, though, also shows the risk of a recession as the Fed puts the brake on the economy.

That’s why Wednesday’s more positive economic reports helped put traders in a buying mood.

“That just provides people with more evidence that this economy is hanging in there,” said Jeff Buchbinder, equity strategist for LPL Financial. “At this point, we have a combination of evidence that inflation is coming down.”

The yield on the 10-year Treasury fell to 2.71% from 2.73% late Tuesday.

Earnings remain in focus this week as investors parse the latest results and statements from companies to better understand how inflation is affecting businesses and consumers.

Oil prices rose following OPEC’s decision to boost production in September at a much slower pace than previous months. Benchmark U.S. crude CLU22, -1.05% added 34 cents to $91.00 a barrel. On Wednesday, U.S. crude oil fell 4% to settle at $90.66 per barrel. Brent crude BRNV22, -1.28%, the international standard, added 21 cents to $96.99 a barrel.

Markets are also watching for potential economic fallout from China after U.S. House Speaker Nancy Pelosi’s visit to Taiwan. China claims self-ruled Taiwan as part of its territory, and banned imports of Taiwanese citrus fruits and frozen fish in retaliation for Pelosi’s visit. But it has avoided disrupting the flow of computer chips and other industrial goods, a step that could jolt the global economy.

Upcoming data on the jobs market could help investors determine how the Federal Reserve will move ahead with its interest rate policy, which has been aggressive in an effort to try and tame inflation. U.S. jobless claims numbers for last week will be released Thursday, and the government issues its July jobs report on Friday.

In currency trading, the U.S. dollar USDJPY, -0.09% edged down to 133.73 Japanese yen from 133.83 yen.

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CHINA COVID-19: Beijing Kicks Off Mass Testing After Spike In Covid Cases

 

According to BBC reports, the Chinese capital Beijing has kicked off mass testing for millions of residents after a spike in Covid cases.

The Chaoyang district reported 26 cases over the weekend – the highest number so far in Beijing’s latest surge.

Long queues outside supermarkets and shops were seen despite government assurances there is sufficient food.

It comes amid fears that Beijing could face a similar situation to Shanghai, which has seen some 25 million people shut in their homes for weeks.

Read Also: Shanghai: China reports three dead in latest Covid outbreak 

‘All the meat was snatched up’
All 3.5 million residents in Chaoyang, Beijing’s most populous district, will undergo three rounds of mass testing, according to a notice by the city’s disease prevention team.

People in Chaoyang queueing up to get tested

The news prompted residents to rush to stock up essential supplies, with images circulating on local media showing supermarket shelves emptied of goods and snaking queues at check-out counters.

Beijing’s major supermarkets also extended their opening hours to accommodate the spike in demand.

Long queues at a supermarket in Beijing

“Never thought I would go to the market early in the morning….when I got there, all the eggs and prawns were gone and all the meat was snatched up,” said one Weibo user in Shanghai, before adding they managed to get some vegetables.

Another Weibo user in Shanghai said: “Seeing people in Beijing rush to buy food is both funny and distressing… it’s like looking at what my own life was like just last month.”

State-media news outlet The Global Times said that Beijing’s fresh food companies have been ordered to increase the supply of groceries like meat, poultry eggs and vegetables.

They also quoted health experts as saying that the results of the mass testing would indicate whether there is a need to escalate measures further, such as locking down several areas.

Separately, Pang Xinghuo, deputy director of the Beijing Center for Disease Prevention and Control, told state-media outlet China Daily that the number of cases in Beijing is expected to increase in the following days.

Censors try to block viral Shanghai lockdown video
Shanghai escalates Covid lockdown restrictions
The latest outbreak in Shanghai, first detected in late March, has seen more than 400,000 cases recorded so far and 138 deaths.

Some of the measures Chinese authorities have enforced include placing electronic door alarms to prevent those infected from leaving and forcibly evacuating people from their homes to carry out disinfection procedures.

Some in locked-down areas of Shanghai say they have been struggling to access food supplies, and forced to wait for government drop-offs of vegetables, meat and eggs.

Green barricades have also been erected overnight in parts of Shanghai without prior warning, effectively preventing residents from leaving their homes.

In contrast to many other countries, China is pursuing a zero-Covid strategy with the aim of eradicating the virus from the country completely.

While officials managed to keep infection levels relatively low at the beginning of the pandemic, later lockdowns have struggled to contain recent, more transmissible variants of the virus.

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