Asian shares gain on hopes for recovery, despite outbreaks

TOKYO (AP) — Shares rose in Asia yesterday, cheered by upbeat projections for a global economic rebound that were tempered by worries over expanding coronavirus outbreaks.

Investors were looking ahead to the release of China’s economic growth data for April-June, a key indicator for trade, manufacturing and investments with implications for the entire region. Singapore is also releasing GDP data.

Japan’s benchmark Nikkei 225 climbed 2.2 per cent to finish at 22,784.74. South Korea’s Kospi gained 1.8 per cent to 2,188.06. Australia’s S&P/ASX 200 added nearly 1.0 per cent to 5,977.50. Hong Kong’s Hang Seng rose 0.7 per cent to 25,914.17, while the Shanghai Composite was up 1.3 per cent at 3,426.87.

Shares also rose in India and Southeast Asia, apart from Singapore.

Stocks rallied last Friday on Wall Street at the end of a week of volatile trading amid worries that rising coronavirus counts may halt the recent upswing in share prices.

Men walk in front of an electronic stock board at a securities firm in Tokyo. PHOTO: AP

While investors are hoping for an improved outlook thanks to the reopening of the Chinese economy following its own early outbreaks, share prices are much higher than justified by the numbers, analysts said.

“I do not think there will be any way to sugar-coat a disastrous Q2,” said Stephen Innes of AxiCorp. “Still, I am not sure how significant the numbers will be given the premise that investors are paying a top premium for technology stocks based on 2021 rebound earnings.”

On top of central bank policy meetings in Japan and elsewhere, corporate earnings are looming.

“According to FactSet, the estimated earnings decline for the S&P 500 index sits at -44.6 per cent, representing a whole different world compared to the S&P 500 index that is approximately six per cent away from its previous all time,” said Jingyi Pan of IG.

“Reconciliation between the two could take place going into the earnings season, although one suspect there may be some meeting in the middle here,” Pan said. “Better than expected recovery on the United States (US) economic data front had so far inspired some convictions that the bar may have been set too low.”

Last Friday, the Dow Jones Industrial Average rose 1.4 per cent to 26,075.30 while the Nasdaq composite added 0.7 per cent to 10,617.44, a new high. The S&P 500 rose 1.1 per cent to 3,185.04. It logged a

1.8 per cent rise for the week, its second straight weekly gain.

After starting on Friday with modest drops, stocks and Treasury yields erased their declines to drive higher. In a signal of rising expectations for the economy, the Russell 2000 index of smaller stocks rose more than the rest of the market, up 1.7 per cent.

Last week’s meandering was a microcosm of the up-and-down churn that stocks have been stuck in for a little more than a month. The market’s momentum has stalled since early June, after the S&P 500 roared back to recover most of an earlier 34 per cent plummet. Massive amounts of aid from central banks and governments around the world have ignited the rally.

In energy trading, benchmark US crude oil dropped USD0.31 to USD40.24 a barrel in electronic trading on the New York Mercantile Exchange. It rose USD0.93 to USD40.55 per barrel last Friday. Brent crude also fell USD0.29 to USD42.95 a barrel.

The US dollar slipped to JPY106.90 from JPY106.92. The euro inched up to USD1.1326 from USD1.1298.