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Asian Shares Mixed On Economic Recovery Concerns

stockmarkets jan18 08jul20 lt

Asian stocks turned in another mixed performance on Wednesday, as the daily rise in coronavirus cases remained above 50,000 in the U.S., raising concerns over a potential delay in the economic recovery.

Gloomy economic forecasts from the Organization for Economic Cooperation and Development and the European Commission also weighed on markets.

The World Health Organization officials warned that the death toll from the pandemic may start to climb again.

Chinese shares rose for the seventh straight session on hopes of a quick economic recovery. The benchmark Shanghai Composite Index rallied 58.10 points, or 1.7 percent, to 3,403.44, while Hong Kong's Hang Seng Index climbed 153.52 points, or 0.6 percent, to 26,129.18.

Japanese shares fell as new coronavirus continued to climb globally, dampening the prospect of a swift economic recovery.

Meanwhile, as the pace of increase in infections in Japan slowed, Economy Minister Yasutoshi Nishimura said there was no need to declare a new state of emergency.

The Nikkei 225 Index swung between gains and losses before ending down 176.04 points, or 0.8 percent, at 22,438.65. The broader Topix slid 0.9 percent to 1,557.23, dragged down by mining and insurance stocks.

Market heavyweight SoftBank Group lost 2.8 percent. Shopping mall operator Aeon Mall slumped 6.3 percent after unveiling expansion plans.

On the other hand, OLED manufacturer Hodogaya Chemical Co. jumped 15.6 percent on reports that Apple will shift to OLED screens for its fifth-generation iPhones this year.

In economic news, Japan posted a current account surplus of 1,176.8 billion yen in May, official data showed. That exceeded expectations for a surplus of 1,088.2 billion yen and was up from 262.7 billion yen in April.

The trade balance showed a deficit of 556.8 billion yen, down 18.1 percent year-on-year. Exports tumbled 28.9 percent on year to 4.197 trillion yen, while imports sank an annual 27.7 percent to 4.754 trillion yen.

Australian markets fell sharply after Victoria said it would reimpose stage three restrictions for six weeks in metropolitan Melbourne and the Mitchell Shire to contain a spike in Covid-19 cases.

Federal Treasurer Josh Frydenberg has warned Victoria's coronavirus lockdowns could cost the national economy $1 billion a week.

The benchmark S&P/ASX 200 Index tumbled 92.60 points, or 1.5 percent, to 5,920.30, while the broader All Ordinaries Index ended down 92.40 points, or 1.5 percent, at 6,034.30.

The big four banks dropped 1-2 percent after the Australian Bankers Association said banks will extend six-month repayment holidays by another four months for households and businesses struggling to service their debts due to the pandemic.

Afterpay, the buy-now-pay-later firm, lost 2.9 percent after a discounted share placement. Energy companies such as Woodside Petroleum, Santos, Oil Search and Beach Energy declined 2-3 percent as oil prices fell on oversupply fears.

Mining heavyweights BHP and Rio Tinto fell around 1 percent, while Alumina slumped 7 percent after saying a joint venture with aluminum giant Alcoa has been assessed $212 million in back taxes.

Northern Star Resources soared 6.5 percent after the company said its shareholders would receive a fully-franked interim dividend. Evolution Mining advanced 1.3 percent after gold prices settled at a nearly nine-year high overnight.

Seoul stocks ended lower for the second straight day on fears that a surge in Covid-19 cases will delay the economic recovery. The benchmark Kospi dipped 5.29 points, or 0.2 percent, to close at 2,158.88. Samsung Electronics shed 0.8 percent and SK Hynix declined 1.3 percent.

New Zealand shares fell modestly, with the benchmark NZX-50 Index ending down 36.46 points, or 0.3 percent, at 11,707.27. Travel-related stocks succumbed to selling pressure, with Kathmandu Holdings losing 4 percent and Air New Zealand declining 3.9 percent.

U.S. stocks fell sharply overnight as several Fed officials warned of challenges to the economy, New York and New Jersey added three more states to their travel advisory, and the U.S. began a formal withdrawal from the World Health Organization.

Meanwhile, Vice President Mike Pence's top aide said during an interview with Bloomberg Radio that the Trump administration wants Congress to cap the next Covid-19 stimulus package at $1 trillion or less.

The Dow Jones Industrial Average dropped 1.5 percent and the S&P 500 declined 1.1 percent to snap its five-day winning streak, while the tech-heavy Nasdaq Composite shed 0.9 percent.

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