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Asian Shares Mixed In Cautious Trading

european market 021219 05aug20 lt

Asian stocks turned in a mixed performance on Wednesday as investors kept a watchful eye on the upcoming U.S. job report as well as negotiations on a U.S. Covid-19 relief bill.

Underlying sentiment turned cautious after reports suggested that the U.S. and China plan to review the implementation of their phase one trade deal in mid-August.

Chinese shares rose after a private survey showed the services sector in the country continued to expand in July, albeit at a slower pace. The Caixin/Markit services Purchasing Managers' Index fell to 54.1 from June's 58.4, which was the highest reading since April 2010. The benchmark Shanghai Composite Index edged up 5.88 points, or 0.2 percent, to 3,377.56.

Hong Kong's Hang Seng Index climbed 155.91 points, or 0.6 percent, to 25,102.54 even as a survey showed business activity in the country contracted further in July.

The Purchasing Managers' Index of Hong Kong compiled by consulting firm IHS Markit dropped to 44.5 last month from 49.6 in June as output and new orders fell at sharper rates and there was a renewed decline in purchasing activity.

Japanese shares fell following two days of gains. The Nikkei average slid 58.81 points, or 0.3 percent, to 22,514.85, with sentiment hit by a firmer yen, disappointing earnings reports and rising coronavirus cases both at home and abroad. The broader Topix finished marginally lower at 1,554.71.

Heavyweight SoftBank Group slumped 4.2 percent and East Japan Railway lost 2.4 percent. Lender Mitsubishi UFJ Financial Group edged down slightly after its first quarter net profit more than halved. Sony Corp. fell 1.6 percent despite its first quarter operating profit coming in above analyst estimates.

In economic news, the latest survey from Jibun Bank showed that the Japanese service sector continued to contract in July, albeit at a slower pace, with a PMI score of 45.4, up from 45.0 in June.

Australian markets fell notably as Virgin Australia announced 3,000 job cuts and Melbourne, already under night curfew, announced fresh restrictions to curb a spike in coronavirus cases.

Queensland State said it would seal off its border with New South Wales and capital Canberra to hold back a second wave of coronavirus cases.

The benchmark S&P/ASX 200 Index dropped 36.30 points, or 0.6 percent, to 6,001.30, while the broader All Ordinaries Index ended down 30.60 points, or 0.50 percent, at 6,135.90.

Banks ended mostly lower, with NAB losing 1.3 percent and Westpac declining 1 percent. Mining heavyweight BHP ended little changed, while rival Rio Tinto declined 1.1 percent.

Telecom firm Telstra Corp. tumbled 2.3 percent after it agreed to sell its Melbourne data centre for about US$300 million.

Gold stocks rallied after safe-haven gold spiked to a record high. Evolution Mining surged 3.7 percent, Newcrest added 2.9 percent and Northern Star Resources soared 4.3 percent.

On the economic front, the latest survey from the Australian Industry Group showed that the construction sector in Australia continued to contract in July, albeit at a slower pace, with a Performance of Construction Index score of 42.7, up from 35.5 in the previous month.

Seoul stocks rose for the third straight session to close at their highest level in nearly two years after reports suggested that U.S. lawmakers were inching closer to a stimulus deal to help the world's top economy recover from pandemic jitters.

The benchmark Kospi surged up 31.89 points, or 1.4 percent, to 2,311.86, marking the highest level since October 1, 2018.

Hanmi Pharmaceutical shares jumped by the daily permissible limit of 29.91 percent to 360,500 won after the company said it has exported technology for a liver treatment drug material to leading global drugmaker Merck Sharp & Dohme.

New Zealand shares ended off their day's lows after official data showed the country's unemployment rate unexpectedly declined to 4.0 percent in the second quarter from 4.2 percent in the three months prior.

The benchmark NZX-50 Index edged down 14 points, or 0.1 percent, to 11,757.72 after falling as low as 11,713.82 earlier in the session.

U.S. stocks rose overnight as investors weighed positive comments from U.S. Senate Democratic leader Chuck Schumer and Senate Majority Leader Mitch McConnell on stimulus against a slew of disappointing earnings results.

In economic news, data showed that factory orders rose strongly in June for the second straight month after historic declines in the spring.

The Dow Jones Industrial Average gained 0.6 percent to extend gains for the third straight session, while the tech-heavy Nasdaq Composite and the S&P 500 rose around 0.4 percent.

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