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Asian Markets Mostly Higher

asiancommentary aug16 30jun20 lt

Asian stock markets are mostly higher on Wednesday after Wall Street capped off one of its best quarterly performances in decades and as data showed that the manufacturing sector in China expanded at a faster rate in June.

The latest survey from Caixin showed that the manufacturing sector in China continued to expand in June, and at a faster rate, with a manufacturing PMI score of 51.2. That's up from 50.7 in May and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

The Australian market is rising following the positive cues from Wall Street. Data showing that Australia's manufacturing sector swung into expansion territory in June also boosted sentiment.

The benchmark S&P/ASX 200 Index is advancing 28.80 points or 0.49 percent to 5,926.70, after touching a low of 5,892.80 earlier. The broader All Ordinaries Index is adding 34.70 points or 0.58 percent to 6,036.00. Australian stocks closed higher on Tuesday.

Gold miners are notably higher after gold prices ended at a nearly nine-year high overnight. Evolution Mining is gaining more than 3 percent and Newcrest Mining is rising more than 2 percent.

Meanwhile, the major miners are little changed. Rio Tinto and BHP are edging up 0.1 percent, while Fortescue Metals is down 0.1 percent.

Oil stocks are weak after crude oil prices declined overnight. Santos is losing more than 1 percent, Woodside Petroleum is lower by 0.7 percent and Oil Search is declining 0.3 percent each.

In the banking sector, Commonwealth Bank, ANZ Banking, National Australia Bank and Westpac are lower in a range of 0.1 percent to 0.7 percent.

AMP Ltd. said it has completed the sale of its life insurance business, AMP Life, to New Zealand-based Resolution Life for A$3 billion. Shares of AMP are rising almost 2 percent.

Suncorp Group has announced certain management changes, saying that Chief Customer & Digital Officer Lisa Harrison has been promoted to the Chief Executive insurance product and portfolio role, while Paul Smeaton has been appointed as chief operating officer insurance. The insurance and banking company's shares are adding 0.2 percent.

Temple & Webster's shares are in a trading halt after the online furniture shop said it is raising A$40 million through an institutional placement.

On the economic front, the latest survey from the Australian Industry Group revealed that the manufacturing sector in Australia swung into expansion territory in June, with a seasonally adjusted Performance of Manufacturing Index score of 51.5. That's up from 41.6 in May, and it moves back above the boom-or-bust line of 50 that separates expansion from contraction.

In the currency market, the Australian dollar is higher against the U.S. dollar on Wednesday. The local unit was quoted at $0.6902, compared to $0.6854 on Tuesday.

The Japanese market is declining despite the positive cues from Wall Street. Data showing that business sentiment among large Japanese manufacturers fell to an eleven-year low also dampened sentiment.

The benchmark Nikkei 225 Index is down 41.94 points or 0.19 percent to 22,246.20, after rising to a high of 22,360.31 earlier. Japanese shares closed higher on Tuesday.

Market heavyweight SoftBank Group is advancing more than 2 percent, while Fast Retailing is down 0.2 percent.

In the financial sector, Mitsubishi UFJ is declining 0.7 percent and Sumitomo Mitsui Financial Group is down 0.1 percent.

The major exporters are lower despite a weaker yen. Canon is declining more than 1 percent, while Panasonic and Sony are lower by 0.6 percent each and Mitsubishi Electric is down 0.5 percent.

In the tech space, Tokyo Electron is rising more than 3 percent and Advantest is higher by more than 2 percent. Among automakers, Honda is declining more than 1 percent and Toyota is down almost 1 percent.

In the oil sector, Japan Petroleum and Inpex are lower by 0.6 percent each after crude oil prices declined overnight.

Among the major gainers, Sky Perfect JSAT Holdings is gaining more than 5 percent, Rakuten is rising almost 3 percent and Fujikura is higher by more than 2 percent.

On the flip side, Mitsui Fudosan, Suzuki Motor and Kikkoman Corp. are all losing almost 3 percent each.

In economic news, the Bank of Japan's quarterly Tankan Survey on business sentiment showed that large manufacturing in Japan weakened sharply in the second quarter of 2020, with a diffusion index score of -34. That missed forecasts for a reading of -31 as expectations were very soft because of the global Covid-19 pandemic. It was down from a score of -8 three months ago.

The outlook came in at -27, also missing expectations for -24 following the -11 score in the previous quarter.

The latest survey from Jibun Bank revealed that the manufacturing sector in Japan continued to contract in June, albeit at a slower pace, with a manufacturing PMI score of 40.1. That's up from 38.4 in May, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction.

In the currency market, the U.S. dollar is trading in the upper 107 yen-range on Wednesday.

Elsewhere in Asia, Shanghai, South Korea, Singapore and Taiwan are also higher, while New Zealand is lower. Indonesia and Malaysia are little changed. The Hong Kong stock market is closed for a public holiday.

On Wall Street, stocks capped off one of the best quarters for the markets in decades, with the Dow soaring by 17.8 percent for its biggest quarterly gain since 1987. Traders continued to express optimism about the economic outlook despite the continued spike in new coronavirus cases across several states. Adding to the positive sentiment, the Conference Board released a report showing a bigger than expected improvement in consumer confidence in the month of June.

The Dow jumped 217.08 points or 0.9 percent to 25,812.88, the Nasdaq spiked 184.61 points or 1.9 percent to 10,058.77 and the S&P 500 surged up 47.05 points or 1.5 percent to 3,100.29.

Meanwhile, the major European markets turned in a mixed performance on the day. The German DAX Index rose by 0.6 percent, while the French CAC 40 Index fell by 0.2 percent and the U.K.'s FTSE 100 Index slumped by 0.9 percent.

Crude oil prices drifted lower on Tuesday as worries about the outlook for energy demand persisted due to a continued surge in new coronavirus cases across the world. WTI crude for August declined $0.43 or 1.1 percent at $39.27 a barrel.

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