Asian shares edged ahead on Tuesday as optimism over a US debt ceiling deal and Japanese chip investments buoyed traders.
But there was caution too, which capped most of those gains, with worries the US debt deal could be a short-term fix and just push trouble further down the road.
However, domestic news was the focus of Japan investors where the Nikkei share average advanced for a fourth straight session, amid hopes for increased investment in the country’s semiconductor industry.
A panel at the Ministry of Economy Trade and Industry (METI) has proposed revising the nation’s chip strategy to promote the development of energy-efficient semiconductors for generative AI. Japan’s southern prefecture of Kumamoto has become a hotbed of chip industry activity of late.
The Nikkei recovered from early declines to close up 0.3% at 31,328.16. On Monday, the gauge touched 31,560.43, a level not seen since July 1990. The broader Topix slid 0.07% to 2,159.22.
China and Hong Kong stocks crept ahead too even as investor sentiment remained bearish ahead of China’s May manufacturing data.
China’s factory activity likely contracted further in May, a Reuters poll showed on Monday, adding to pressures facing the world’s second-biggest economy amid an uneven economic recovery from the Covid-19 pandemic. The official manufacturing Purchasing Managers’ Index (PMI) will be released on Wednesday.
The Shanghai Composite Index rose 0.09%, or 2.76 points, to 3,224.21, while the Shenzhen Composite Index on China’s second exchange edged up 0.49%, or 9.84 points, to 2,011.99.
Shares of some artificial intelligence companies soared, with Innovative Medical Management Co Ltd and Jiangsu Apon Medical Technology Co Ltd surging 10.0% and 20.0%, respectively.
Tech stocks traded in Hong Kong lost 0.7%, with Meituan and Tencent down 2.4% and 1.0%, respectively, but the Hang Seng Index fought back to advance 0.24%, or 44.67 points, to 18,595.78. The China Enterprises Index was up 0.52%.
Elsewhere across the region, in early trade, there were also gains in Singapore, Seoul and Mumbai. But Sydney, Wellington, Taipei, Manila, Bangkok and Jakarta retreated.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.02%, after US stocks were closed on Monday. The index is down 1.3% so far this month.
US Treasuries Rally
Trading cues were scant after the holiday in the United States and Britain, while optimism over a resolution to the US debt ceiling impasse hit a snag after a handful of Republican lawmakers said they would oppose a proposed deal.
The package still has to be approved by the Republican-controlled House of Representatives and Democratic-controlled Senate before the debt limit is reached, likely by next Monday.
In Asian trade, longer-dated US Treasuries rallied as bond traders welcomed the deal to suspend Washington’s borrowing limit until January 2025 in exchange for caps on spending and cuts in government programmes.
Benchmark 10-year yields dropped 6 basis points during Asian trade to 3.7616% while thirty-year yields fell 6.3 bps to 3.9134%.
The pan-region Euro Stoxx 50 futures were up 0.14%, German DAX futures gained 0.09% while FTSE futures were down 0.08% at 7,631. US stock futures, the S&P 500 e-minis, were up 0.23% at 4,223.
The dollar dropped 0.03% against the yen to 140.4, just below the year’s high of 140.91 hit on Monday.
US crude dipped 0.7% after to $72.17 a barrel after earlier trading up by 0.3%. Brent crude fell to $76.42 per barrel. Gold was slightly lower with the spot price at $1,935.72 per ounce.
Tokyo – Nikkei 225 > UP 0.30% at 31,328.16 (close)
Hong Kong – Hang Seng Index > UP 0.24% at 18,595.78 (close)
Shanghai – Composite > UP 0.09% at 3,224.21 (close)
London – FTSE 100 < DOWN 0.16% at 7,614.67 (0935 GMT)
New York – Dow > UP 1.00% at 33,093.34 (Friday close)
- Reuters with additional editing by Sean O’Meara