Asian stocks struggled on Tuesday with investors brow-beaten by weeks of bad news about the global outlook.
China’s markets endured another bad day at the office, as the yuan slumped to a nearly 15-year low, with traders rattled by President Xi Jinping’s growing power.
Japanese stocks, though, were the outlier buoyed by some strong earnings results which raised hopes for other companies that might benefit from a weakened yen.
The Japanese currency has fallen more than 20% against the dollar this year, including a 6% drop over the July-September quarter.
The benchmark Nikkei 225 index rose just over 1%, or 275.38 points to end at 27,250.28. The broader Topix index gained 1.06%, or 19.95 points, to 1,907.14.
The index was supported by major index contributor SoftBank Group, which rose 3.8%.
MSCI’s broadest index of Asia-Pacific shares fell to their lowest since April 2020 before an attempted rebound in beaten-down Hong Kong tech shares dragged it back.
China’s yuan extended its decline to a near 15-year low, following Monday’s sell-off in Chinese assets by global investors worried about Beijing’s policy direction.
Chinese markets remained volatile and jittery, with Xi Jinping’s new leadership team raising worries that China will increasingly prioritise the state at the cost of the private sector.
Hong Kong’s Hang Seng Index, which plunged 6.4% the previous session, bounced from 13-year lows on Tuesday morning but pared those gains to end 0.1% down, or 15.10 points, at 15,165.59.
The Hang Seng Tech Index jumped as much as 6.1% following Monday’s market rout.
Thailand, Singapore Gain
China stocks also rebounded, partly aided by foreign inflows, after the previous day’s record outflows via Stock Connect, but ended marginally down at the close.
The Shanghai Composite Index dipped 0.04%, or 1.27 points, to 2,976.28, while the Shenzhen Composite Index on China’s second exchange dropped close to 0.5%, or 8.83 points, to 1,923.51.
Elsewhere across the region, stocks remained choppy with markets in Thailand, Singapore and Philippines gaining between 0.2% and 0.7%, while stocks in South Korea, Taiwan and Indonesia were down between 0.1% and 1.4%.
Indian stocks were down with Mumbai’s signature Nifty 50 index dipping 0.1%, or 15.20 points, at 17,715.55.
Alphabet, Microsoft Earnings
Globally, US and European futures were flat as investors awaited corporate earnings from heavyweights including Alphabet and Microsoft.
The dollar was a fraction weaker – with the euro firm ahead of an expected European Central Bank rate hike later this week – and sterling found some support from hopes incoming Prime Minister Rishi Sunak might bring stability.
Treasuries were broadly steady with the benchmark yield on 10-year US government debt at 4.2047%. The Fed Funds rate is expected to peak at 4.50%-4.75% or higher in Q1 2023, according to 49 of 80 economists in a Reuters poll.
Later in the day tech giants Microsoft and Alphabet will report results along with some bellwether firms such as General Motors, UPS, General Electric and Coca-Cola.
The European Central Bank meets this week and is widely expected to raise rates by 75 basis points. In commodities markets, gold prices were flat at $1,648 per ounce, while benchmark Brent crude futures were steady at $93.20 per barrel.
Tokyo – Nikkei 225 > UP 1.02% at 27,250.28 (close)
Hong Kong – Hang Seng Index < DOWN 0.1% at 15,165.59 (close)
Shanghai – Composite < DOWN 0.04% at 2,976.28 (close)
London – FTSE 100 < DOWN 0.43% at 6,984.14 (0940 BST)
New York – Dow > UP 1.34% at 31,499.62 (Monday close)
- Reuters with additional editing by Sean O’Meara