Asia’s major markets endured a mixed day on Friday despite another record close on Wall Street, but Tokyo did see significant advances on the back of hopes for fresh stimulus after Japan’s prime minister announced he would step down.
The broad gains came at the end of a strong week as concerns about the fast-spreading Delta variant, which weighed on confidence for much of August, gave way to optimism over the recovery outlook.
Data showing fewer people than expected applied for jobless benefits in the United States last week – the lowest since March 2020 – provided a positive lead ahead of the non-farm payrolls, which could have a huge bearing on the Federal Reserve’s plans over tapering its ultra-loose monetary policy.
Fed boss Jerome Powell indicated last week that the bank would take it easy in winding down the financial support – and would be even more careful in lifting interest rates – but offered no timetable for doing so.
Observers say a strong jobs reading would likely mean the Fed would move sooner than later.
The S&P 500 and Nasdaq on Wall Street finished at fresh records after the figures, and the buying filtered through to Asia.
Tokyo jumped more than 2% after Yoshihide Suga said he will not run for his ruling party’s leadership, effectively ending his tenure as premier and throwing the race to succeed him wide open.
Analysts said the gains were fuelled by hopes the next leader will push for a huge spending package to support the virus-hit economy. Suga’s rival in the race for the post last year, Fumio Kishida, called on Thursday for tens of trillions of yen in spending to battle the coronavirus pandemic.
The Nikkei 225 jumped 2.05%, or 584.60 points, to end at 29,128.11, while the broader Topix index gained 1.61%, or 31.88 points, to 2,015.45, a 30-year-high. Sydney, Seoul, Wellington, Taipei, Manila, Mumbai, Bangkok and Jakarta also rose.
But Hong Kong and Shanghai fell, with tech firms hurt by Alibaba’s vow to donate more than $15 billion over the next five years to charitable causes after Chinese President Xi Jinping called for the rich to do more to tackle inequality.
Alibaba, which has been a key target of Beijing’s drive against high-flying tech firms, said it would put the money to “common prosperity” schemes. But the firm’s share price sank more than 3% in Hong Kong on Friday owing to worries about its bottom line.
SENSE OF CAUTION
The Hang Seng Index fell 0.72%, or 188.44 points, to 25,901.99. The Shanghai Composite Index shed 0.43%, or 15.31 points, to 3,581.73, while the Shenzhen Composite Index on China’s second exchange fell 0.55%, or 13.47 points, to 2,414.30.
Despite the general advance on markets this week, fuelled by a general consensus that the global economy will continue to recover from the pandemic, there remains a sense of caution.
“Historically, September is a weak month for equities, particularly in the US, and some investor caution is natural given elevated valuation multiples and a challenging macro environment,” Lewis Grant at Federated Hermes said.
Tokyo – Nikkei 225: UP 2.1% at 29,128.11 (close)
Hong Kong – Hang Seng Index: DOWN 0.7% at 25,901.99 (close)
Shanghai – Composite: DOWN 0.4% at 3,581.73 (close)
New York – Dow: UP 0.4% at 35,443.82 (close)
- AFP and Sean O’Meara