Markets

Nikkei Gains on Fed Hopes, China Stimulus Boosts Hang Seng

 

Asia’s share indexes began the week on the front foot with hopes high of an end to central banks’ tightening campaigns coming soon and bets on more China stimulus lifting investor mood.

Stocks across the region ended the month on a firm note in a week littered with major economic releases, central bank meetings and earnings updates from mega caps Amazon and Apple, though rising Japanese bond yields posed a risk.

Tokyo’s Nikkei share average reached a four-week high, as a calm bond market following the Bank of Japan’s surprise policy tweak and growing optimism from a slowing of US inflation boosted investor sentiment.

Earnings reports also produced some standout winners, with Toyota Group’s logistics company Toyota Tsusho surging almost 10% and helping lift the auto sector.

 

Also on AF: ‘Atrocious’ Move to Join China BRI Didn’t Help Italy: Minister

 

The Nikkei gained 1.26% to 33,172.22, and was up as much as 2% earlier in the session, while the broader Topix gained 1.39% to 2,322.56.

On Friday, the BoJ kept stimulus settings unchanged but announced it would conduct bond buying operations at a yield of 1% instead of the official 0.5% ceiling under its yield curve control.

The benchmark Japanese government bond yield rose to a nine-year high of 0.605% to start Monday trading, but failed to push above that as the central bank conducted additional purchase operations to slow its rise.

Mainland China and Hong Kong stocks also extended gains to close their best month since January, as a slew of supportive measures rolled out by the Chinese government boosted sentiment, particularly in the private sector.

China’s State Council issued measures to restore and expand consumption in the automobile, real estate and services sector, though this was still a long way from the massive fiscal spending markets have been counting on.

The Shanghai Composite Index rose 0.46%, or 15.11 points, to 3,291.04, while the Shenzhen Composite Index on China’s second exchange edged up 0.82%, or 16.88 points, to 2,069.51.

The Hang Seng Index gained 0.82%, or 162.38 points, to 20,078.94.

Elsewhere across the region, in early trade, Sydney, Seoul, Singapore, Mumbai, Taipei, Wellington, Manila and Jakarta were also up.

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.5%, having gained 5.2% so far in July to reach a five-month high.

 

Apple, Amazon, Starbucks Report

Figures due this week include the US ISM surveys on manufacturing and services, the July payrolls report and European inflation.

The Bank of England is widely expected to raise rates by at least a quarter point but markets are more divided on whether the Reserve Bank of Australia will hike or stay on hold.

S&P 500 futures dipped 0.1% on Monday, but the index was still up 2.9% for July, while Nasdaq futures dipped 0.2%. Eurostoxx 50 futures and FTSE futures both eased 0.4%.

Apple Inc and Amazon.com both report on Thursday, while other well-known names with results due include Western Digital Corp, Caterpillar Inc, Starbucks Corp, and Advanced Micro Devices.

In the forex markets, the yen was again under pressure as the dollar pushed up to 141.87 yen, a long way from Friday’s brief low of 138.05.

The euro had also recovered from its initial pullback to stand at 156.18 yen, while steadying on the dollar at $1.1010 after some wild swings last week.

In commodities, gold was off a shade at $1,955 an ounce, leaving it 1.8% higher for the month so far.

Oil prices took a breather, having risen for five weeks in a row as production cuts by OPEC+ tightened supply.

 

Key figures

Tokyo – Nikkei 225 > UP 1.26% at 33,172.22 (close)

Hong Kong – Hang Seng Index > UP 0.82% at 20,078.94 (close)

Shanghai – Composite > UP 0.46% at 3,291.04 (close)

London – FTSE 100 < DOWN 0.12% at 7,684.75 (0934 GMT)

New York – Dow > UP 0.50% at 35,459.29 (Friday close)

 

  • Reuters with additional editing by Sean O’Meara

 

Read more:

China Deflation Risks Deepen as Sharp Pay Cuts Hit Consumption

Stagnant Demand, China Woes Temper Waning Chip Glut Cheer

BoJ Shock Move Drags on Nikkei, Stimulus Vows Lift Hang Seng

 

 

Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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