Japan’s Nikkei is exception, slipping on weak economic data, worry over earnings
TOKYO — Asian shares were mostly higher in muted trading Monday, as worries about the pandemic kept optimism in check despite a rally that closed out last week on Wall Street.
Investors growing wary over upcoming earnings reports have been cashing in recent gains, helping pull Japanese shares lower. Tokyo’s benchmark Nikkei 225 index NIK, -0.26% lost 0.5%. Big exporters logged some of the largest losses, with Toyota Motor Corp. 7203, -0.80% falling 0.6% and Honda Motor Co. 7267, -1.84% shedding 1.8%.
Japan reported core private sector machinery orders edged 0.2% higher in August, contrary to forecasts for a decline. But overall, economic indicators remain weak.
Other regional benchmarks rose. Hong Kong’s Hang Seng index HSI, 2.07% gained 1.7% and the Shanghai Composite SHCOMP, 2.38% surged 2.3%. South Korea’s Kospi 180721, 0.46% rose 0.5% and benchmark indexes in Taiwan Y9999, +0.53%, Singapore STI, 0.53% and Indonesia JAKIDX, 0.72% advanced. Australia’s S&P/ASX 200 XJO, 0.49% inched up 0.2%.
“While U.S. politics remain center stage, a string of Asia releases and monetary policy meeting decisions will be watched this week,” said Jingyi Pan, senior market strategist at IG in Singapore, referring to central bank meetings in South Korea, Indonesia and Singapore.
Indicators out of China, such as trade and inflation readings also remain on investors’ minds.
Investors were also keeping an eye on the Chinese yuan, after the People’s Bank of China moved over the weekend to rein in the currency, changing rules to make it cheaper to short.
“The yuan fix was friendlier than expected, and perhaps the policy shift on the weekend was a reminder that the PBoC’s not-so-invisible hand is still dealing the cards when it comes to the yuan,” wrote Stephen Innes, global markets strategist at Axi, in a note. “And while regulators welcome a stronger yuan, they do not welcome noncorrelated speculatively driven markets.”
Wall Street closed out its best week in three months on Friday as negotiations on Capitol Hill aimed at delivering more aid to the ailing U.S. economy encouraged investors. The S&P 500 SPX, +0.87% rose 0.9% to 3,477.14, its third straight gain. The benchmark index ended the week with a 3.8% gain, its strongest rally since early July.
Signs as of late Sunday were not promising. A new White House coronavirus aid proposal got bad reviews from both ends of the political spectrum. House Speaker Nancy Pelosi rejected the most generous Trump administration plan to date as “one step forward, two steps back.” The Republicans who control the Senate are dismissing it as too expensive and a political loser for conservatives.
On Friday the White House increased its offer to $1.8 trillion, up from $1.6 trillion, according to a Republican aide familiar with the plan. Pelosi’s most recent public proposal was about $2.2 trillion, though that included a business tax increase that Republicans won’t go for.
Worries persist that Congress and the White House won’t deliver more support for the economy as it reels from the impact of the pandemic and concerns that stock prices simply got too high during the summer.
Economists say the outlook is grim without such support, and the chair of the Federal Reserve has said repeatedly it will likely be necessary.
The Dow Jones Industrial Average DJIA, +0.56% gained 0.6% to 28,586.90, creeping into positive territory for the year. The Nasdaq composite COMP, +1.39% climbed 1.4%, to 11,579.94
Other major challenges remain, chief among them the still-spreading coronavirus pandemic, highlighted by Trump’s own COVID-19 diagnosis.
In energy trading, benchmark U.S. crude CLX20, -1.28% lost 35 cents to $40.25 a barrel in electronic trading on the New York Mercantile Exchange. It lost 59 cents to $40.60 per barrel on Friday.
Brent crude BRNZ20, -1.24%, the international standard, fell 37 cents to $42.48 a barrel.
The U.S. dollar USDJPY, -0.06% rose to 105.54 Japanese yen from 105.53 yen last Friday.