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Nikkei Powers On As Delta Spoils The Mood Elsewhere Across Asia

Fears about the impact of new coronavirus outbreaks on the economic recovery becalmed most trading floors around the region while the prospect of political change in Japan spurred more gains

The Nikkei is currently on course for a three-decade high. Reuters photo.

 

Asia’s major markets dropped back on Wednesday as a tepid lead from Wall Street and worries about the impact of the Delta coronavirus variant on the global recovery dampened the mood – though hopes for more stimulus helped Tokyo extend its recent rally.

Profit-taking added to the caution with some of the wind appearing to have come out of buyers’ sails, having pushed valuations up for more than a week.

While the Nasdaq clocked up yet another record with a small gain, the S&P 500 and Dow ended with a whimper as they reopened after a long weekend, with analysts suggesting concerns about Covid and the end of government handouts were key reasons.

 

Also on AF: Pressure Mounts On China Evergrande As Bonds And Shares Tumble

 

Traders are keeping a close eye on the fast-spreading Delta strain, which is sending infection rates spiking around the world and forcing some governments to reimpose containment measures or lockdowns, raising concerns about the economic recovery.

Still, observers say the general mood is positive for the future, with hopes that the US Federal Reserve will delay tapering its monetary policy until the end of the year lending support.

Tokyo’s Nikkei 225 ended above 30,000 for the first time since April as it continued the rally that started when Japan’s Prime Minister Yoshihide Suga said on Friday that he will stand down, raising hopes his successor will introduce fresh economic stimulus.

On Wednesday, one of the front-runners, Fumio Kishida, pledged to push for trillions of yen in investment if he takes the post.

 

POSITIVE VIBES

Data showing growth in the second quarter was better than first thought added to the positive vibes in Japan. The Nikkei has risen around 5% since the news broke, putting it on course for a three-decade high.

The benchmark Nikkei 225 index added 0.89%, or 265.07 points, to 30,181.21, while the broader Topix index rose 0.79%, or 16.23 points, to 2,079.61.

Hong Kong reversed early gains, while there were also losses in Sydney, Seoul, Singapore, Taipei, Wellington, Mumbai, Bangkok and Jakarta. Shanghai ended marginally down.

 

BITCOIN STRUGGLES

The Hang Seng Index eased 0.12%, or 32.70 points, to 26,320.93. The Shanghai Composite Index was flat, inching down 1.40 points to 3,676.59, while the Shenzhen Composite Index on China’s second exchange dipped 0.08%, or 1.95 points, to 2,492.59.

Bitcoin continued to struggle, sitting at around $45,000 after seeing wild fluctuations on Tuesday as El Salvador became the first country to use it as legal tender.

The unit plunged by almost a fifth to as low as $43,000 after a technical issue hit the official digital wallet on vast consumer demand, though that was later resolved, while analysts said it was also hit by profit-taking.

 

MARKETS

Tokyo – Nikkei 225: UP 0.9% at 30,181.21 (close)

Hong Kong – Hang Seng Index: DOWN 0.1% at 26,320.93 (close)

Shanghai – Composite: FLAT at 3,675.19 (close)

New York – Dow: DOWN 0.8% at 35,100.00 (close)

 

  • AFP and Sean O’Meara

 

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Sean OMeara

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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