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Asian Shares Mixed As US-China Tensions Rise

stockmarkets jan15 01jul20 lt

Asian stocks turned in a mixed performance on Wednesday as investors weighed rising U.S.-China political tensions against data showing that the manufacturing sector in China expanded at a faster rate in June.

After Chinese President Xi Jinping signed a controversial security law that gave Beijing new powers over Hong Kong, U.S. Secretary of State Mike Pompeo said it's a "sad day" for the people of the territory and warned Beijing of new countermeasures.

U.S. President Donald Trump wrote on Twitter that he's "more and more angry at China" over the new coronavirus pandemic.

Chinese shares rose sharply after the latest survey from Caixin showed the manufacturing sector in China continued to expand in June, with a manufacturing PMI score of 51.2, up from 50.7 in May.

The benchmark Shanghai Composite Index jumped 41.31 points, or 1.4 percent, to 3,025.98. The Hong Kong market was closed for a public holiday.

Meanwhile, Japanese stocks fell and the yen firmed slightly after a top government spokesman said Japan could re-impose a state of emergency in a worst case scenario amid the continued spread of Covid-19 cases in Tokyo. Weak business confidence and manufacturing data also weighed on markets.

Japanese manufacturers' confidence sank in the second quarter to a level not seen since the 2009 global financial crisis, a closely-watched survey showed, underscoring the damage from the coronavirus pandemic.

The manufacturing sector in Japan continued to contract in June, albeit at a slower pace, the latest survey from Jibun Bank revealed with a manufacturing PMI score of 40.1, up from 38.4 in May.

The Nikkei 225 Index dropped 166.41 points, or 0.8 percent, to 22,121.73, while the broader Topix closed 1.3 percent lower at 1,538.61, its lowest level since mid-June.

Automobile stocks paced the declines, with Toyota motor, Nissan and Honda Motor falling between 1.6 percent and 2 percent. Suzuki Motor Corp. shares slumped 4.5 percent.

Australian markets rose after data showed that Australia's manufacturing sector swung into expansion territory in June. The upside was capped as Melbourne announced drastic measures across 36 suburbs to tackle Victoria's worsening coronavirus crisis.

The benchmark S&P/ASX 200 Index rose 36.50 points, or 0.6 percent, to 5,934.40, while the broader All Ordinaries Index ended up 39.70 points, or 0.7 percent, at 6,041.

Gold miner Evolution Mining surged 6.2 percent and Newcrest Mining added 3.2 percent after bullion prices ended at a nearly nine-year high overnight on safe-haven demand.

Data centre manager NEXTDC jumped 8.1 percent on news its data centres in New South Wales have won several material customer contracts.

AMP advanced 1.6 percent after it completed the sale of its life insurance business, AMP Life, to New Zealand-based Resolution Life for A$3 billion.

On the other hand, insurer Suncorp Group slumped 4.1 percent after announcing certain management changes.

The total number of building permits issued in Australia in May tumbled a seasonally adjusted 16.4 percent month on month in May, a government report showed today. That missed expectations for a decline of 10.0 percent following the 2.1 percent drop in April.

The manufacturing sector in Australia swung into expansion territory in June, the latest survey from the Australian Industry Group revealed with a seasonally adjusted Performance of Manufacturing Index score of 51.5, up from 41.6 in May.

Seoul stocks edged lower after China passed a new national security law for Hong Kong and data showed the country's exports slumped more than expected in June, extending the double-digit contraction into a third month. The benchmark Kospi gave up early gains to end down 1.63 points, 0.1 percent, at 2,106.70.

The manufacturing sector in South Korea continued to contract in June, albeit at a slower pace, the latest survey from IHS Markit revealed with a manufacturing PMI score of 43.4, up from 41.3 in May.

New Zealand shares fell sharply, with the benchmark NZX-50 Index ending down 100.78 points, or 0.9 percent, at 11,350.27. Auckland International Airport shares tumbled 2.3 percent after the company warned of more job cuts and big hits to its profitability.

The total number of building permits issued in New Zealand was up a seasonally adjusted 35.6 percent sequentially in May, Statistics New Zealand said in a report. That followed the downwardly revised 9.9 percent decline in April (originally -6.5 percent).

U.S. stocks rose overnight as investors weighed better-than-estimated economic data against concerns over rising coronavirus cases and worsening U.S.-China trade relations.

The Dow Jones Industrial Average rose 0.9 percent to post its biggest quarterly gain since 1987, while the tech-heavy Nasdaq Composite rallied 1.9 percent and the S&P 500 climbed 1.5 percent.

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