Asian Shares Advance Despite Growth Woes

stockmarkets jan23 01aug22 lt

Asian stocks ended broadly higher on Monday after key U.S. benchmark indexes finished July 2022 with the largest gains since 2020 on the back of better-than-expected earnings and easing concerns over the need for continued aggressive interest rate hikes by the U.S. Federal Reserve.

The dollar index fell and U.S. Treasury yields declined following some slightly less hawkish messaging from the Fed last week. Oil prices declined in Asian trading as weak Chinese factory activity data stoked demand concerns.

Chinese stocks fluctuated before ending slightly higher for the day. The benchmark Shanghai Composite Index edged up 0.2 percent to 3,259.96, while Hong Kong's Hang Seng Index closed marginally higher at 20,165.84, reversing an early slide.

China's factory activity contracted unexpectedly in July, the National Bureau of Statistics said Sunday, with the corresponding PMI falling to 49 from 50.2 in June as a result of fresh COVID-19 outbreaks.

The non-manufacturing gauge, which measures activity in the construction and services sectors, dropped to 53.8 from 54.7, and overall property loans rose at the slowest rate on record as of the end of June -underlining the economic challenges facing the country.

The Caixin/Markit manufacturing PMI eased to 50.4 from 51.7 in the previous month, adding to calls for more policy stimulus to fuel growth.

Japanese shares advanced as earnings optimism outweighed lingering concerns about a challenging macroeconomic environment.

Japan's manufacturing activity expanded at the weakest rate in 10 months in July, as pressure from rising prices and supply disruptions hurt output and new orders, a survey showed.

The final au Jibun Bank Japan manufacturing PMI dropped to a seasonally adjusted 52.1 in July from the previous month's 52.7 final - marking the slowest pace of growth since September last year.

The Nikkei 225 Index rose 0.7 percent to 27,993.35, while the broader Topix Index closed 1 percent higher at 1,960.11. Chip-linked shares led the surge, with Tokyo Electron, Screen Holdings, Shin-Etsu Chemical and Advantest climbing 1-4 percent.

Toyota Motor jumped 3.5 percent and Nippon Yusen surged 3.1 percent ahead of their earnings results due later in the week. Sony Group lost 3.2 percent after downgrading its profit outlook for the fiscal year.

Seoul stocks ended on a flat note as data showed the country's factory activity shrank in July for the first time in nearly two years. Exports grew at a faster annual pace in July than a month earlier, while the trade deficit widened to the biggest in six months due to high commodity prices, separate data showed.

Australian markets rose notably, led by miners, utilities and energy companies. The benchmark S&P/ASX 200 Index climbed 0.7 percent to 6,993, extending gains for a fifth straight session and marking the longest winning streak since April. The broader All Ordinaries Index ended up 0.6 percent at 7,213.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX-50 Index inched up 0.3 percent to close at 11,525.87.

Infratil touched a record high before closing 6.7 percent higher at $8.94 after the infrastructure investor announced a huge lift in valuation for its U.S. renewable energy investment Longroad Energy.

U.S. stocks rose for a third straight session on Friday as strong quarterly earnings from the likes of Amazon and Apple helped investors look past inflation concerns, with a key inflation gauge surging sharply again in June.

The tech-heavy Nasdaq Composite rallied 1.9 percent to reach a nearly three-month closing high, while the Dow added 1 percent and the S&P 500 surged 1.4 percent to hit their best closing levels in well over a month.

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