Asian stocks endured a mixed start to the week with some gains off the back of strong oil prices but persistent worries over global growth and searing prices pushed back bourses elsewhere.
Japanese stocks closed higher, supported by utility companies as the country continues to deal with an unprecedented heatwave heading into July.
China’s mainland markets advanced too as much of the world’s No2 economy emerges from weeks of Covid curbs but Hong Kong and Seoul retreated.
Tokyo’s Nikkei share average ended up 0.84% at 26,153.81 after briefly dipping below the psychological 26,000-mark in the morning session. The broader Topix gained 1.34% to 1,869.71.
Utilities gained 4.11%, making it the best performing sector on the Nikkei, with Tokyo Electric Power Company Holdings surging 12.95% as temperatures soar across the country.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.14%, after losing 1.8% last week.
Chinese blue chips closed 0.7% higher, boosted by a 4.65% surge in Chinese healthcare stocks. But some cities in eastern China have been forced to tighten Covid-19 curbs again amid new coronavirus clusters.
The Shanghai Composite Index was up 0.53%, or 17.79 points, to 3,405.43, while the Shenzhen Composite Index on China’s second exchange gained 1.17%, or 25.90 points, to 2,245.31.
The Hang Seng Index dropped 0.13%, or 29.44 points, to 21,830.35.
US July 4 Celebrations
Elsewhere across the region, Indonesia stocks plunged more than 3% and South Korea dipped 0.22%. Indian stocks edged ahead with Mumbai’s signature Nifty 50 index up 0.25%, or 39.25 points, at 15,791.30.
Globally, the rebound in oil prices gave stocks a lift in holiday trade in a session muted by July 4 celebrations in the US.
MSCI’s world equity index gained 0.25% after global equities hit 18-month lows last month on anxiety about rising inflation and interest rates.
“Some markets are starting to find their footing but there’s a lot of volatility right now,” said Sebastien Galy, senior macro strategist at Nordea Asset Management, pointing to risks from the release of key US non-farm payrolls data later this week.
European stocks rallied 0.7% and Britain’s FTSE rose over 1%, helped by gains in oil and gas companies.
US S&P 500 futures and Nasdaq futures fell 0.7% and 0.8% respectively, however, as recent soft US data suggested downside risks for this week’s June payrolls report.
The report on Friday is forecast to show jobs growth slowing to 270,000 in June, with average earnings slowing a touch to 5.0%.
Safe Harbour Dollar Benefits
Minutes of the Fed’s June policy meeting on Wednesday are expected to sound hawkish, however, given the committee chose to hike rates by a super-sized 75 basis points.
The market is pricing in around an 85% chance of another hike of 75 basis points this month and rates at 3.25-3.5% by year end.
“But the market has also moved to price in an increasingly aggressive rate cut profile for the Fed into 2023 and 2024, consistent with a growing chance of recession,” analysts at NAB said.
In currencies, investor demand for the most liquid safe harbour has tended to benefit the US dollar, which was steady near two-decade highs against a basket of competitors at 105.09.
A high dollar and rising interest rates have not been kind to non-yielding gold, which was trading at $1,808 an ounce, down 0.13% after hitting a six-month low at $1,784 last week.
Tokyo – Nikkei 225 > UP 0.84% at 26,153.81 (close)
Hong Kong – Hang Seng Index < DOWN 0.13% at 21,830.35 (close)
Shanghai – Composite > UP 0.53% at 3,405.43 (close)
New York – Dow > UP 1.05% at 31,097.26 (Friday close)
- Reuters with additional editing by Sean O’Meara