Asian Shares Rise After China Data

Asian stocks rose on Tuesday as economic optimism prevailed despite a spike in global coronavirus cases. Data showing that China’s manufacturing sector expanded more than expected in June bolstered sentiment.

Federal Reserve Chair Jerome Powell on Monday welcomed the return of economic activity but cautioned the outlook for the United States is still “extraordinarily uncertain.”

Japanese shares rose sharply after strong gains on Wall Street overnight on optimism over post-lockdown economic activity. The Nikkei 225 Index jumped 293.10 points, or 1.3 percent, to 22,288.14, while the broader Topix closed 0.6 percent higher at 1,558.77.

Investors shrugged off disappointing economic data released earlier in the day, including rising unemployment and weak factory activity for May.

Industrial output in Japan plummeted an annual 25.9 percent in May, the Ministry of Economy, Trade and Industry said. That was well shy of expectations for a drop of 11.3 percent following the 15.0 percent decline in the previous month.

On a seasonally adjusted monthly basis, industrial production sank 8.4 percent – again missing estimates for a drop of 5.6 percent following the 9.8 percent slide in April.

The unemployment rate in Japan came in at a seasonally adjusted 2.9 percent in May – missing expectations for 2.8 percent and up from 2.6 percent in April.

Market heavyweight SoftBank Group rose 1.3 percent and Fast Retailing advanced 1.8 percent. NTT rose half a percent on a Nikkei report that the telecom group would enter the renewable energy market.

Chinese shares rose notably after an official survey revealed the manufacturing sector in China continued to expand in June, and at a slightly faster rate with a manufacturing PMI score of 50.9. That beat expectations for 50.4 and was up from 50.6 in May.

The non-manufacturing index came in with a score of 54.4 – beating expectations for 54.1 and up from 53.6 in the previous month.

The benchmark Shanghai Composite Index climbed 23.16 points, or 0.8 percent, to 2,984.67. while Hong Kong’s Hang Seng Index ended up 0.5 percent at 24,427.19.

U.S. Commerce Secretary Wilbur Ross said on Monday that regulations for providing preferential treatment to Hong Kong over China were suspended.

Local media reported that China has passed a controversial security law giving it new powers over Hong Kong after months of protests last year.

Australian markets rallied as investors hoped for a stimulus-backed economic rebound. The benchmark S&P/ASX 200 Index surged up 82.90 points, or 1.4 percent, to 5,897.90, while the broader All Ordinaries Index ended up 85.70 points, or 1.5 percent, at 6,001.30.

The big four banks rose between 0.4 percent and 1.2 percent, while energy companies Woodside Petroleum and Santos soared around 5 percent each.

Industrial stocks also gained ground, with toll-road operator Transurban Group rising 2.8 percent. Collins Foods spiked 12.7 percent after it reported strong full-year revenue and underlying net profit.

On the economic front, the Reserve Bank of Australia said that private sector credit issued in Australia was down 0.1 percent sequentially in May, shy of expectations for 0.2 percent following the flat reading in April.

Seoul stocks closed higher despite fears of economic setbacks stemming from the recent surge in new coronavirus cases and renewed political tensions between Beijing and Washington. The benchmark Kospi rose by 0.7 percent to 2,108.33.

Industrial output in South Korea fell a seasonally adjusted 6.7 percent month on month in May, Statistics Korea said – missing expectations for a fall of 1.4 percent following the 6.0 percent decline in April.

On a yearly basis, industrial output sank 9.6 percent – also missing forecasts for a fall of 4.5 percent after sinking 5.1 percent in the previous month.

Another report showed that the total value of retail sales in South Korea was up a seasonally adjusted 1.7 percent month on month in May, beating expectations for an increase of 1.2 percent.

On a yearly basis, retail sales climbed 4.6 percent – shy of expectations for a gain of 4.8 percent and down from the 5.3 percent annual gain in the previous month.

New Zealand shares posted strong gains after Reserve Bank Governor Adrian Orr said that interest rates will remain low for the foreseeable future. The benchmark NZX-50 Index ended up 1.8 percent at 11,451.05.

In economic releases, a measure of New Zealand business sentiment rose to -34.4 in June from -41.8 in May, final data from ANZ showed. The score was weaker the preliminary estimate of -33.0.

ANZ said a vigorous bounce out of lockdown was evident in the numbers, but the levels were consistent with the assessment that the recession is just starting.

U.S. stocks ended on a buoyant note overnight as strong housing data as well as hopes for more stimulus measures from the Federal Reserve and Congress helped investors shrug off reports showing sharp spikes in new coronavirus cases over the weekend.

The Dow Jones Industrial Average climbed 2.3 percent to reach its best closing level in nearly four weeks, while the S&P 500 gained 1.5 percent and the tech-heavy Nasdaq Composite added 1.2 percent.

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