Hang Seng, Nikkei Edge Ahead But US Banking, Data Fears Weigh

 

Asia’s major stock indexes were in cautious mood on Tuesday with investors keeping their powder dry to see what happens in the US’s under-pressure banking sector and with a raft of big data releases due this week.

The sale of First Republic Bank’s assets to JPMorgan Chase resolved the third US bank failure in two months but markets remain anxious about the next headline to break.

Most Japanese shares declined as jitters surrounding the US banking system weighed on domestic financial stocks, while exporters got a lift from a weaker yen.

 

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But the Nikkei share average still touched a 16-month peak of 29,278.80 earlier in the session. However, by the close it was just 0.09% higher at 29,154.22, with decliners far outnumbering gainers. The broader Topix slid 0.14% to 2,070.42.

The Nikkei share average edged up 0.12%, or 34.77 points, to close at 29,157.95, while the broader Topix was down 0.12%, or 2.53 points, to 2,075.53.

Tokyo markets will now be closed for the next three days to celebrate Japan’s Golden Week holidays, leaving domestic equity traders very little room to react to the Federal Reserve Open Market Committee meeting as well as key US earnings and payrolls data.

The yen traded as weak as 137.58 per dollar in Tokyo, near a two-month low, and depreciated to the 151 level against the euro for the first time since 2008.

Hong Kong stocks were marginally ahead as investors assessed mixed China manufacturing activity data, with trading resuming after the long weekend.

China’s factory output unexpectedly shrank in April but mobility indicators suggest the current long Labour Day holiday is likely hit a record in terms of the number of travellers.

Meanwhile on the geopolitical front, President Joe Biden told his Philippine counterpart Ferdinand Marcos Jr. that the US commitment to the defence of its ally was “ironclad,” including in the South China Sea, where Manila is under pressure from China.

The Hang Seng Index gained 0.20%, or 39.24 points, to 19,933.81. Hong Kong-listed gambling stocks jumped 1.8% after Macau announced April gambling revenue soared 449.9% year-on-year, big tech firms also picked up 0.4%.

 

China Markets’ Labour Holiday Break

China’s domestic stock exchanges were closed for the Labour Day holiday and will resume trading on Thursday.

Elsewhere across the region, Seoul, Taipei, Kuala Lumpur, Singapore, Wellington and Manila were all up, while Sydney, Jakarta and Bangkok were down.

The Aussie dollar shot more than 1% higher against its US counterpart and the New Zealand dollar rose 0.5% in sympathy after the Reserve Bank of Australia delivered a 25 basis point hike, defying expectations it would stay on hold.

MSCI’s broadest index of Asia-Pacific shares outside Japan was flat as concern swirls around US banks.

And there were jitters at short tenors in the US Treasury market as the government’s borrowing ceiling looms.

Much of Europe returns from May Day holidays on Tuesday, with final activity surveys due, preliminary inflation figures and a survey of European bank lending that will be closely watched given recent stresses in the sector.

European futures rose 0.2% in Asia, while S&P 500 futures were flat. Rate hikes also loom, with interest-rate futures fully pricing a 25 bp rate rise in Europe on Thursday, with a chance of a larger rise, and pricing a 95% chance for a 25 bp hike from the Federal Reserve on Wednesday.

 

Key figures

Tokyo – Nikkei 225 > UP 0.12% at 29,157.95 (close)

Hong Kong – Hang Seng Index > UP 0.20% at 19,933.81 (close)

Shanghai – Composite <> CLOSED

London – FTSE 100 < DOWN 0.06% at 7,865.83 (0933 GMT)

New York – Dow < DOWN 0.14% at 34,051.70 (Monday close)

 

• Reuters with additional editing by Sean O’Meara

 

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