Asian shares recouped some of their recent steep losses on Monday as beaten-down Chinese markets drew retail bargain hunters, while stellar U.S. earnings and progress on an infrastructure bill supported Wall Street futures.
There was the prospect of more fiscal stimulus ahead as U.S. senators worked to finalise a sweeping $1 trillion infrastructure plan that could pass this week.
MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.8%, having hit its low for the year so far last week.
Japan’s Nikkei bounced back 1.8%, but that was from its lowest since January.
China’s economic problems were highlighted by surveys showing factory activity slowing sharply in July amid rising costs and extreme weather.
· China's shares rebound after worst month in nearly 3 years
China’s shares rebounded on Monday morning, with benchmark indexes shaking off some of the previous week’s sharp decline, helped by gains in financials and consumer staples firms.
At the midday break, the Shanghai Composite index was up 1.5% at 3,448.31 points and the blue-chip CSI300 index was up 2.09%. The CSI 300 fell nearly 5.5% last week, capping its biggest monthly loss since October 2018.
Both indexes had fallen around 1% earlier in morning trade on rising domestic concern over a surge in Delta variant COVID-19 infections. China on Monday reported 98 new confirmed coronavirus cases in the mainland for the day earlier, the highest daily rise since Jan. 24.
Those concerns also weighed on the fixed income market, where benchmark Chinese government bond yields dropped to their lowest level in more than a year.
Adding to worries over the economic outlook, a private sector survey showed China’s factory activity growth fell to a 15-month low in July.
· Asian shares try to stabilise, China growth a worry
Asian shares were seeking a modicum of stability on Monday as a run of stellar U.S. corporate earnings put a floor under markets, though Beijing’s regulatory crackdown continued to reverberate amid disappointing economic news.
China’s woes were underlined by surveys showing factory activity slowing sharply in July amid rising costs and extreme weather.
About 89% of the nearly 300 recent U.S. earnings reports have beaten analysts’ profit estimates. Earnings are now expected to have climbed 89.8% in the second quarter, versus forecasts of 65.4% at the start of July.
Indonesia, Vietnam and Malaysia saw factory activity shrink in July due to a resurgence in infections and stricter COVID-19 restrictions, according to private surveys.
The optimism was apparent on Wall Street with S&P 500 futures rising 0.5% and Nasdaq futures 0.4%.
EURO STOXX 50 futures added 0.3%, while FTSE futures gained 0.2%
· European stocks advance, tracking positive global sentiment; Meggitt soars 58%
European stocks advance, tracking positive global sentiment; Meggitt soars 58%
The pan-European Stoxx 600 was 0.7% higher in early trade, with autos adding 2% to lead gains as almost all sectors and major bourses entered positive territory.
On the data front, final Markit manufacturing PMI (purchasing managers’ index) readings for July are due from across the euro zone and the U.K. on Monday morning.
· Stateside, stock futures were higher in early premarket trade as strong earnings and bipartisan progress on a wide-ranging $1 trillion infrastructure bill overrode concerns about the spread of the delta Covid-19 variant.
· Thai baht, Malaysian ringgit weaken as virus bites
Thailand's baht was on track for its worst session in two weeks on Monday, while Malaysia's ringgit was set to see its worst day in more than a week, as the two Southeast
Asian countries continued to battle a surge in coronavirus
The baht weakened as much as 0.33% in its worst
session since July 19, while the ringgit lost 0.17%.
Thailand on Sunday extended tight restrictions in the
capital and other high-risk provinces, as it faced COVID-19
outbreaks fuelled by the highly transmissible Alpha and Delta variants.
Meanwhile, the country also saw anti-government protesters take to the streets on Sunday to demand the resignation of Prime Minister Prayuth Chan-ocha over his handling of the coronavirus crisis.
Thailand's 10-year government bond yields down 2 basis points at 1.57%
Reference: CNBC, Reuters
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