Asia’s indexes had a mostly unspectacular day on Wednesday with fears over a global slowdown dictating the mood on trading floors.
The outlier was Hong Kong where hopes of a recovery in China were buoyed by the possible lifting of even more Covid curbs, though that optimism was tempered elsewhere with shares on the mainland giving up early gains.
Japan’s Nikkei index closed at a near one-month low, weighed down by Wall Street’s weak finish on economic concerns as well as corporate earnings.
The Nikkei share average fell 0.40% to close at 27,574.43, its lowest close since November 10. The broader Topix slipped 0.35% to 1,941.50.
SoftBank Group jumped 2.15% and provided the biggest support to the Nikkei after a report that its billionaire chairman and CEO, Masayoshi Son, has raised his stake in the firm to 34%, taking him closer to a buyout of the conglomerate.
The S&P 500 and Nasdaq closed lower overnight after a choppy session on Wall Street, as investors struggled to grasp a clear direction as they weighed how the Federal Reserve’s monetary policy tightening might feed through into corporate America.
Downbeat comments from top executives at the biggest US banks have rattled the markets, with Goldman Sachs, JPMorgan and Bank of America all saying a mild to more pronounced recession was likely ahead.
Hong Kong’s Hang Seng Index surged after a pro-China newspaper reported that the Hong Kong government is considering relaxing its Covid-19 curbs further. The Hang Seng rallied 3.38%, or 635.41 points, to 19,450.23.
The latest report comes after the government on Wednesday announced sweeping changes to ease a tough anti-Covid policy that has battered China’s economy.
“While it could be a bumpy journey over next few weeks, China is ready to move on from Covid in one to two quarters,” said Wenli Zheng, portfolio manager of the China Evolution Equity Strategy at T Rowe Price, adding that Chinese equities could be the bright spot in 2023.
China’s stock market, though, handed back its early gains as that optimism was overtaken by fears over the impact of another winter surge in Covid cases.
The Shanghai Composite Index dipped 0.07%, or 2.27 points, to 3,197.35, while the Shenzhen Composite Index on China’s second exchange dropped 0.32%, or 6.66 points, to 2,064.38.
Elsewhere across the region, Australia’s S&P/ASX 200 index lost 0.67%. Indian stocks were up with Mumbai’s signature Nifty 50 index rising 0.26%, or 48.85 points, to close at 18,609.35.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.57%, on track to snap a two-day losing streak.
Also weighing were US Treasury yields, with five-year notes to 30-year bonds hovering at three-month lows.
The US central bank is widely expected to raise interest rates by 50 basis points next week after delivering four consecutive 75 bps hikes.
The Bank of Canada on Wednesday hinted that its historic tightening campaign was near an end as it raised benchmark overnight interest rates by 50 basis points to 4.25%, the highest level in almost 15 years.
Data on Wednesday showed that US worker productivity rebounded at a slightly faster pace than initially thought in the third quarter, but the trend remained weak, keeping labour costs elevated.
In the currency market, the US dollar wobbled as the prospect of a recession in the country loomed.
Oil prices rose on Thursday after sinking to their lowest level this year. US crude recently rose 0.9% to $72.66 per barrel and Brent was at $77.79, up 0.8% on the day.
Tokyo – Nikkei 225 < DOWN 0.40% at 27,574.43 (close)
Hong Kong – Hang Seng Index > UP 3.38% at 19,450.23 (close)
Shanghai – Composite < DOWN 0.07% at 3,197.35 (close)
London – FTSE 100 > UP 0.13% at 7,498.56 (0935 GMT)
New York – Dow <> FLAT at 33,597.92 (Wednesday close)
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