· Stocks adrift, havens sought as virus fears cast shadow over recovery
Asian stock markets struggled to make headway on Wednesday, while safe havens such as gold and the Japanese yen firmed as surging coronavirus infections in the United States took some of the shine off better-than-expected factory activity in China.
MSCI’s broadest index of Asia-Pacific shares outside Japan inched 0.2% higher, led by a 0.8% rise in Chinese blue chips. But Japan’s Nikkei fell 0.8%.
S&P 500 futures fell 0.5% and European futures were slightly negative.
Sentiment had been boosted by signs that China’s factories are slowly gathering steam, with the Caixin/Markit manufacturing PMI rising to 51.2, compared with expectations for 50.5.
That followed firm U.S. housing data earlier this week. But it was accompanied by a surge in U.S. virus cases, a survey showing Japanese business mood souring and fears of growing Sino-U.S. tension over China’s crackdown in Hong Kong.
Hong Kong police said they arrested a man holding a pro-independence flag in the first apparent use of new security laws that were imposed by China on its freest city late on Tuesday evening.
Hong Kong markets were closed for a holiday on Wednesday to mark the anniversary of the former British colony’s return to China in 1997.
Meanwhile, the United States recorded its biggest single-day spike since the pandemic began.
The surge has prompted California, Texas and Florida to shut recently re-opened bars in the last few days, while Australia has locked-down parts of its second-biggest city, Melbourne, to try and stop a spike in cases there.
Markets are looking to U.S. manufacturing activity data due at 1400 GMT for the latest gauge of its economic recovery and expect a rebound. U.S. non-farm payrolls data on Thursday is also eagerly awaited and expected to show hiring.
· Nikkei drops on gloomy BOJ tankan, COVID-19 concerns
Japanese shares ended lower on Wednesday as the Bank of Japan’s quarterly corporate survey showed business mood dropped to the worst level in 11 years, while the continued spread of COVID-19 cases in Tokyo also sapped risk appetite.
The benchmark Nikkei average ended 0.75% lower at 22,121.73.
The Bank of Japan’s tankan survey showed the mood among big manufacturers declined to minus 34 last month from minus 8 in March.
The BOJ survey also indicated that big firms plan to raise capital expenditure by 3.2% in the current fiscal year through March 2021, higher than initially expected.
Investor sentiment was dealt another blow after Japan’s Chief Cabinet Secretary Yoshihide Suga said the coronavirus state of emergency could be re-imposed in a worst case scenario.
Tokyo has sought to keep new COVID-19 cases below 20 a day since Japan lifted a state of emergency in late May, but has had six straight days of more than 50 new cases, as of Wednesday.
The broader Topix dipped 1.29% to 1,538.61, its lowest since mid-June. (Reporting by Eimi Yamamitsu, Editing by Sherry Jacob-Phillips and Devika Syamnath)
· China shares rally to four-month high on rate cuts, recovery hopes
China’s benchmark index closed at its highest level in nearly four months on Wednesday, as the central bank’s move on rate cuts and the country’s improved June factory data continued to fuel hopes for a quicker economic recovery.
At the close, the Shanghai Composite index was up 1.38% at 3,025.98, the highest since March 6.
China’s central bank announced on Tuesday that it would cut the re-discount and re-lending rates by 25 basis points as of July 1, in a move to reduce funding costs for smaller firms and rural sectors
· European markets edge higher as investors monitor economic data; German stocks hit by DAX glitch
European stocks edged into positive territory on Wednesday morning as investors monitor economic data which could signal the extent of a potential economic recovery as countries emerge from lockdown measures.
The pan-European Stoxx 600 gained 0.3% in early trade, with oil and gas stocks climbing 1.4% to lead gains while utilities slid 0.3%.
Reference: CNBC, Reuters
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