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US Data, China Crackdown Fears and Covid’s Spread Drag Stocks Back

Fed’s Richard Clarida says bond-buying programme could be scaled back; Tencent sheds 3% and Netease loses 4% as Beijing’s regulators loom


Hong Kong, Shanghai, Tokyo, Sydney, Seoul, Singapore, Taipei, Mumbai, Manila and Wellington were all in negative territory on Tuesday. Photo: Reuters

• Fed’s Richard Clarida says bond-buying programme could be scaled back

• Tencent sheds 3% and Netease loses 4% as Beijing’s regulators loom

 

Asia’s markets dipped on Thursday as a downbeat Wall Street contemplated mixed US data and concerns about the fast-spreading Delta coronavirus variant.

There was also an air of gloom over signs that the Federal Reserve could finally begin winding back its ultra-loose monetary policy by the end of the year.

Adding to selling pressure were worries that China now has the online gaming sector in its crosshairs, after a regulatory crackdown on its tech, private tuition and property industries last month.

 

Also on AF: China Should End Tax Breaks for Gaming Sector, Securities Times Says

 

Tencent, which has been hammered by Beijing’s recent soundings, shed more than 3% while Netease lost more than 4%.

News that more than 200 million people had now been infected with Covid in just over 18 months highlighted the huge battle governments face in bringing the pandemic under control, with the uneven rollout of vaccines raising fears about the global recovery.

A major concern is the spike in cases in China, the world’s second-biggest economy and major global growth driver, which some economists warn could put a big dent in its annual growth.

US officials on Thursday indicated that the variant’s spread could be affecting the jobs market. Data from payroll services firms showed US private hiring in July came in at 330,000, the weakest since February, while also less than half the previous month and well below expectations.

 

EMPLOYMENT REPORT

The figures gave investors reason to think ahead of Friday’s government employment report, which some analysts have forecasted will show a gain of as much as a million jobs.

They also offset news that activity in the crucial US services sector hit a record high last month thanks to further business reopenings.

And Fed vice-chairman Richard Clarida raised the prospects of the US central bank scaling back its huge bond-buying programme and lifting interest rates as soon as 2023. The ultra-accommodative measures have been a key driver of the rally in global markets since their March 2020 low point.

After a soft lead from Wall Street, where the S&P 500 came off a record high, Asia struggled.

 

GAMING COMPANIES

Hong Kong led the losses after a report in China’s state-backed Securities Times said the government should end tax breaks for gaming companies as they have grown into global firms.

The Hang Seng Index shed 0.84%, or 221.86 points, to 26,204.69. The Shanghai Composite Index fell 0.31%, or 10.67 points, to 3,466.55, while the Shenzhen Composite Index on China’s second exchange slipped 0.75%, or 18.58 points, to 2,447.04.

Tokyo’s Nikkei 225 index ended up 0.52%, or 144.04 points, at 27,728.12, while the broader Topix index was up 0.39%, or 7.55 points, at 1,928.98 at the close.

 

OIL SHIFT

There were also losses in Shanghai, Singapore, Seoul, Wellington, Taipei, Manila and Bangkok. Sydney, Mumbai and Jakarta rose.

Oil prices edged up but struggled to make any headway into the previous day’s big drops, which came on the back of fears over Chinese demand as it imposes lockdowns and after a surprise jump in US inventories.

Both main contracts have lost around a tenth of their value since hitting multi-year highs at the start of July.

 

MARKETS

Tokyo – Nikkei 225: UP 0.5% at 27,728.12 (close)

Hong Kong – Hang Seng Index: DOWN 0.8% at 26,204.69 (close)

Shanghai – Composite: DOWN 0.3% at 3,466.55 (close)

New York – Dow: DOWN 0.9% at 34,792.67 (close)

 

  • AFP and Sean O’Meara

 

Read more:

Japan’s New Financial Watchdog Chief Targets ESG ‘Greenwashing’

China’s Tencent Woes Hit European and US Gaming Stocks

 

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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