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Asian Shares Fall Amid US-China Tensions

asian market down 07aug20 lt

Asian stocks fell broadly on Friday after the Trump administration unveiled ban on U.S. transactions with ByteDance's TikTok and Tencent-owned WeChat, signaling increasing tensions in U.S.-China relations.

Investors also looked forward to the U.S. jobs data due later in the day, with analysts forecasting that employment growth likely slowed in July from the previous month due to a resurgence in Covid-19 infections.

Chinese shares fell as a further escalation in U.S.-China tensions overshadowed upbeat exports data. The benchmark Shanghai Composite index gave up 32.43 points, or 0.96 percent, to end at 3,354.04, while Hong Kong's Hang Seng index ended down as much as 1.60 percent at 24,531.62.

China's exports grew notably in July as most of the economies relaxed lockdown measures introduced to curb the coronavirus spread, data from the General Administration of Customs revealed.

Driven by demand for medical supplies, electronics and automobiles, exports grew 7.2 percent on a yearly basis in July, confounding expectations for a drop of 0.2 percent.

At the same time, imports dropped 1.4 percent from a year earlier in contrast to a 1 percent rise economists' had forecast. As a result, the trade surplus totaled $62.33 billion. Economists had forecast the surplus to fall to $42 billion from June's $46.42 billion surplus.

Japanese shares ended lower as investors reacted to a raft of lackluster domestic earnings and rising Sino-U.S. tensions following a U.S. ban on transactions with China's tech firms.

The Nikkei average slid 88.21 points, or 0.39 percent, to 22,329.94, while the broader Topix index closed 0.20 percent lower at 1,546.74 ahead of a long weekend. Japan stock markets will be closed on Monday for a public holiday.

Sumco Corp, which produces equipment for making semiconductors, plunged 9 percent on weak earnings. Peer Advantest slumped 4.8 percent and Screen Holdings lost 3 percent.

Similarly, personal care company Shiseido plummeted 8.6 percent after posting a net loss in the first half of the year.

On the data front, the average household spending in Japan fell an annual 1.2 percent in June, the Ministry of Internal Affairs and Communications said - coming in at 273,699 yen. That beat forecasts for a decline of 7.5 percent following the 16.2 percent tumble in May.

Australian markets declined as heightened coronavirus-induced restrictions in Melbourne stoked fears of further economic damage.

The Reserve Bank of Australia has warned the jobs market will take longer to recover from the coronavirus recession than expected due to extension of job support packages.

Prime Minister Scott Morrison said on Thursday unemployment would peak at 10 percent and up to 400,000 people will likely lose their jobs as a result of the Victorian lockdown.

The benchmark S&P/ASX 200 index dropped 37.40 points, or 0.62 percent, to 6,004.80, while the broader All Ordinaries index ended down 35.40 points, or 0.57 percent, at 6,144.90.

Mining heavyweight BHP declined 1.3 percent and Rio Tinto tumbled 2.9 percent after rising sharply the previous day amid more signs of improving downstream steel demand in China.

Banks ended mixed while Insurance Australia Group shed 0.8 percent after it reported a dramatic fall in full-year net profit after tax due to rising claims costs. Energy companies ended broadly lower even as oil prices hovered near five-month highs.

The services sector in Australia continued to contract in July, albeit at a slower rate, the latest survey from the Australian Industry Group revealed today with a Performance of Service Index score of 44.0, up sharply from 31.5 in June.

Seoul stocks rose for the fifth day running on hopes the United States is making progress on a new economic stimulus package. The benchmark Kospi edged up 9.06 points, or 0.39 percent, to 2,351.67, marking the highest level since Sept. 27, 2018.

Electric vehicle battery makers and automakers paced the gainers. LG Chem soar as much as 9.7 percent to a record high and Samsung SDI rallied 3.9 percent.

New Zealand shares ended sharply lower as investors booked profits in large-cap stocks such as Fisher & Paykel Healthcare. The benchmark NZX-50 index fell 117.91 points, or 1 percent, to 11,646.68, while shares Fisher & Paykel shares lost 2.9 percent.

In economic news, inflation expectations for the two years ahead rose to 1.43 percent in the second quarter from 1.24 percent in the previous quarter, data from the Reserve Bank of New Zealand showed today.

U.S. stocks rose overnight after the number of Americans applying for unemployment benefits came in below expectations and President Trump said he could issue executive orders if Democrats won't agree to a new coronavirus stimulus bill.

The tech-heavy Nasdaq Composite rallied 1 percent to a fresh record closing high, while the S&P 500 rose 0.6 percent and the Dow gained 0.7 percent to end the day at their best closing levels in five and two months, respectively.

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