Asia-Pacific markets mixed as tech rally lifts Wall Street

China’s exports and imports fell less than expected in August, declining 8.8% and 7.3% year on year respectively. This is less steep than the fall of 9.2% in exports and 9% in imports expected by economists polled by Reuters. The country’s trade balance came in at $68.36 billion, less than the $80.6 billion seen in June and also lower than the $73.9 billion expected in the Reuters poll.

The better-than-expected trade data suggests that China’s economy is still resilient despite the impact of the Covid-19 pandemic and the regulatory crackdown on various sectors. However, some analysts warned that the outlook remains uncertain as the Delta variant poses a risk to global demand and supply chains.

Asia-Pacific markets mixed as tech rally lifts Wall Street
Asia-Pacific markets mixed as tech rally lifts Wall Street

Australia’s trade surplus narrows

Australia’s trade surplus narrowed to A$12.1 billion ($8.9 billion) in July, down from A$13.3 billion ($9.8 billion) in June, according to the Australian Bureau of Statistics. Exports fell 5% to A$41.3 billion ($30.4 billion), while imports rose 3% to A$29.2 billion ($21.5 billion).

The decline in exports was mainly driven by a 10% drop in iron ore shipments, which account for about a third of Australia’s total exports. The fall in iron ore prices was partly due to weaker demand from China, which has been curbing steel production to reduce carbon emissions. Imports rose on the back of higher purchases of consumer goods, capital goods and services.

Japan’s Nikkei snaps eight-day winning streak

Japan’s Nikkei 225 index fell 0.75% on Thursday, ending an eight-day winning streak that had lifted it to a 31-year high on Wednesday. The index was dragged down by losses in consumer staples, utilities and health care sectors. Investors took profits after the recent rally, which was fueled by hopes of a new political leadership and more fiscal stimulus following Prime Minister Yoshihide Suga’s announcement that he will not seek re-election.

The Topix index also closed lower by 0.38%, while the Jasdaq index bucked the trend and gained 0.23%. The Japanese yen strengthened against the US dollar, trading at 109.76 per dollar, compared with 110.25 per dollar on Wednesday.

South Korea’s Kospi extends losses

South Korea’s Kospi index fell 0.59% on Thursday, marking its third consecutive day of losses. The index was weighed down by declines in technology, financials and industrials sectors. Samsung Electronics, the largest component of the index, dropped 1.32%, while SK Hynix, the second-largest, slid 1.65%.

The South Korean won weakened against the US dollar, trading at 1,173.50 per dollar, compared with 1,171.50 per dollar on Wednesday. The Bank of Korea kept its benchmark interest rate unchanged at 0.5%, as expected, but signaled that it may hike rates as early as next month to curb rising household debt and inflation pressures.

Hong Kong’s Hang Seng index falls amid Evergrande woes

Hong Kong’s Hang Seng index shed 1.37% on Thursday, as concerns over the financial health of China’s largest property developer Evergrande Group continued to weigh on investor sentiment. Evergrande shares rose 6.25%, after surging more than 70% on Wednesday, following news that it had avoided default on two bond coupon payments. However, the company still faces a liquidity crisis and a potential restructuring that could have ripple effects across China’s real estate sector and beyond.

The Hang Seng Tech index also fell 1.77%, as Chinese tech giants faced renewed regulatory scrutiny from Beijing. Alibaba Group, Tencent Holdings and Meituan all closed lower by more than 2%.

Wall Street rises on tech rally

Wall Street rose on Wednesday, ahead of key US data that is expected to show how close the Federal Reserve is from ending its rate hikes. The Nasdaq Composite led the gains, rising 1.14%, as tech stocks rallied on positive news from Tesla and Qualcomm. Tesla shares jumped 10% after Morgan Stanley upgraded the stock and predicted a significant rally ahead because of breakthroughs with its autonomous software. Qualcomm shares rose nearly 4% after the semiconductor company said it will supply Apple with 5G modems for smartphones through 2026.

The S&P 500 gained 0.67% and the Dow Jones Industrial Average 0.25%, aided by a rise in Walt Disney shares. Disney shares rose 2.6% after the media giant announced that it will release the rest of its 2021 films exclusively in theaters before streaming them online. Investor sentiment was also helped by a report in The Wall Street Journal on Sunday saying there was consensus among the Federal Reserve not to raise rates at next week’s meeting.

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