Asian Markets Trading Mostly Lower

Asian stock markets are trading mostly lower on Tuesday, despite the broadly positive cues from Wall Street overnight, as a further surge in coronavirus cases in Beijing ignited fears of economic slowdown amid supply chain concerns. Persistent inflation, looming interest rate hikes and the Ukraine war also weighed on market sentiment. Asian markets closed mixed on Monday.

News about potential easing of lockdown in the financial hub of Shanghai and U.S. President Joe Biden’s remarks that he might drop trade tariffs on China resulted in improved risk sentiment earlier in the session.

However, parts of Beijing have again come under a lockdown amid signs the pandemic outbreak is spreading in more and more Chinese cities.

Investors now look ahead to a speech from Jerome Powell on Tuesday and the latest Fed minutes on Wednesday for cues on the health and outlook for the global economy.

The Australian stock market is slightly lower in choppy trading on Tuesday, giving up some of the gains in the previous two sessions, with the benchmark S&P/ASX 200 staying above the 7,100 level, despite the broadly positive cues from Wall Street overnight, dragged largely by technology stocks which mirrored their peers on the tech-heavy Nasdaq. The markets also remain cautious after the new Prime Minister was sworn in on Monday.

The benchmark S&P/ASX 200 Index is losing 10.80 points or 0.15 percent to 7,138.10, after touching a high of 7,161.00 and a low of 7,114.00 earlier. The broader All Ordinaries Index is down 13.30 points or 0.18 percent to 7,385.60. Australian stocks closed slightly higher on Monday.

Among the major miners, BHP Group and Rio Tinto are gaining almost 1 percent each, while Mineral Resources is advancing 3.5 percent, Fortescue Metals is up more than 1 percent and OZ Minerals is adding more than 2 percent.

Oil stocks are mixed, with Beach energy edging down 0.3 percent, while Santos is edging up 0.5 percent. Origin Energy and Woodside Petroleum are flat.

Among tech stocks, Appen and Xero are losing more than 1 percent each, while Afterpay owner Block is slipping more than 6 percent, WiseTech Global is declining almost 3 percent and Zip is sliding almost 4 percent.

Gold miners are mixed. Newcrest Mining is losing almost 1 percent and Gold Road Resources is edging down 0.4 percent, while Northern Star Resources is edging up 0.4 percent and Evolution Mining is adding more than 1 percent. Resolute Mining is flat.

Among the big four banks, Commonwealth Bank and National Australia Bank are gaining almost 1 percent each, while Westpac and ANZ Banking are edging up 0.4 percent each.

In economic news, the manufacturing sector in Australia continued to expand in May, albeit at a slower pace, the latest survey from S&P Global showed on Tuesday with a manufacturing PMI score of 55.3. That’s down from 58.8 in April, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. This marked the twenty-fourth successive month in which conditions in the manufacturing sector strengthened, though at the slowest pace in four months. The survey also showed that the services PMI fell to 53.0 in May from 56.6 in April, while the composite PMI slipped to 52.5 from 55.9.

In the currency market, the Aussie dollar is trading at $0.708 on Tuesday.

The Japanese stock market is modestly lower on Tuesday, giving up some of the gains in the previous two sessions, with the Nikkei 225 staying below the 26,900 level, following the broadly positive cues from Wall Street overnight, with data showing Japan’s manufacturing activity expanded at the slowest pace in three months. Supply chain concerns also remain due to parts shortages amid the COVID lockdowns in China.

The benchmark Nikkei 225 Index closed the morning session at 26,863.33, down 138.19 points or 0.51 percent, after hitting a low of 26,809.95 earlier. Japanese shares ended significantly higher on Monday.

Market heavyweight SoftBank Group is losing more than 2 percent and Uniqlo operator Fast Retailing is down almost 1 percent. Among automakers, Honda is edging down 0.5 percent, while Toyota is flat.

In the tech space, Advantest and Screen Holdings are losing almost 1 percent each, while Tokyo Electron is edging up 0.1 percent. In the banking sector, Sumitomo Mitsui Financial is gaining almost 1 percent, Mitsubishi UFJ Financial is adding more than 1 percent each and Mizuho Financial is edging up 0.2 percent.

The major exporters are higher, with Sony and Canon gaining almost 1 percent each, while Panasonic and Mitsubishi Electric are edging up 0.4 percent each.

Among the other major losers, Recruit Holdings is losing more than 5 percent, CyberAgent is slipping more than 4 percent and Z Holdings is declining more than 3 percent.

Conversely, Isetan Mitsui O.S.K. Lines is gaining more than 3 percent, while Isuzu Motors, Mitsui E&S Holdings and NTN are adding almost 3 percent each.

In economic news, the manufacturing sector in Japan continued to expand in May, albeit at a slower pace, the latest survey from Jibun Bank showed on Tuesday with a manufacturing PMI score of 53.2. That’s down from 53.5 in April, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. The survey also showed that the services PMI improved to 51.7 in May from 50.7 in April, while the composite PMI rose to 51.4 from 51.1.

In the currency market, the U.S. dollar is trading in the higher 127 yen-range on Tuesday.

Elsewhere in Asia, Hong Kong is down 1.2 percent, while New Zealand, China, South Korea, Malaysia, and Taiwan are lower by between 0.1 and 0.8 percent each. Indonesia is bucking the trend and is up 1.2 percent. Singapore is relatively flat.

On Wall Street, stocks showed a strong move to the upside during trading on Monday following the extreme volatility seen over the past few sessions. The major averages advanced early in the session and managed to remain firmly positive throughout the day.

The major averages held on to their strong gains going into the close. The Dow surged 618.34 points or 2 percent to 31,880.24, the Nasdaq jumped 180.66 points or 1.6 percent to 11,535.27 and the S&P 500 shot up 72.39 points or 1.9 percent to 3,973.75.

The major European markets all also moved to the upside on the day. While the U.K.’s FTSE 100 Index surged by 1.7 percent, the German DAX Index and the French CAC 40 Index shot up by 1.4 percent and 1.2 percent, respectively.

Crude oil futures pared early gains and settled flat on Monday. Oil prices climbed higher earlier in the day amid hopes of increased demand from China, while a weaker dollar also offered support. West Texas Intermediate crude oil futures for July ended at $110.29 a barrel, up a penny from Friday’s close of $110.28 a barrel.

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