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    Asian shares mixed on US rally, China economic growth woes

    TOKYO (AP) – Asian shares were mixed yesterday, as Chinese shares sank after leaders acknowledged the official 5.5 per cent growth target for this year won’t be met.

    Investors appear to have grown more convinced that the Federal Reserve may temper its aggressive interest rate hikes aimed at taming inflation after the Commerce Department reported the United States (US) economy contracted at a 0.9 per cent annual pace in the last quarter. That followed a 1.6 per cent year-on-year drop in the first quarter.

    Hong Kong’s Hang Seng index dropped 2.4 per cent to 20,123.55 and the Shanghai Composite index declined one per cent to 3,250.64 after China’s leaders acknowledged the struggling economy won’t hit its official 5.5 per cent growth target this year.

    The announcement after a planning meeting of the ruling Communist Party said on Thursday Beijing will try to prop up sagging consumer demand but will stick to anti-COVID-19 tactics that have disrupted manufacturing and trade. It underscores the high cost Xi’s government is willing to incur to stop the virus.

    Japan’s benchmark Nikkei 225 lost 0.2 per cent to 27,801.64, while Australia’s S&P/ASX 200 gained 1.0 per cent to 6,945.20. South Korea’s Kospi added 0.7 per cent to 2,451.50.

    Japanese government data showed factory output in June jumped 8.9 per cent from the previous month, marking the first rise in three months. The recent easing of pandemic lockdowns in China has helped boost Japanese production.

    “On the economic data front, easing China’s restrictions also drove a stronger-than-expected June output for Japan, with China’s re-opening potentially having a positive knock-on impact across the region as well into the second half of the year,” said market strategist at IG in Singapore Yeap Jun Rong.

    A woman walks past a bank’s electronic board showing the Hong Kong share index in Hong Kong. PHOTO: AP

    A surge in COVID-19 infections to record levels in many parts of Japan has raised concern.

    Butregional head of research Asia-Pacific at ING Robert Carnell believes that Japan’s second quarter gross domestic product (GDP) will rebound marginally from the first quarter’s contraction.

    On Thursday, the S&P 500 rose 1.2 per cent to 4,072.43, while the Dow added one per cent to close at 32,529.63. The Nasdaq gained 1.1 per cent to 12,162.59. The Russell 2000 rose 1.3 per cent to 1,873.03.

    Consecutive quarters of falling GDP are an informal, though not definitive, indicator of what economists call a technical recession.

    The GDP report signalled weakness across the economy. Consumer spending slowed as Americans bought fewer goods. Business investment fell. Inventories tumbled as businesses slowed their restocking of shelves, shedding two percentage points from GDP.

    The Federal Reserve has made slowing the US economy to tame the highest inflation in 40 years its goal by raising interest rates, most recently on Wednesday. The latest GDP report, along with other recent weak economic data, could be giving some investors confidence that the central bank will be able to ease up on the size of any further rate hikes.

    The central bank raised its key short-term interest rate by 0.75 percentage points on Wednesday, lifting it to the highest level since 2018. The move sparked a broad market rally led by technology stocks that helped give the Nasdaq its biggest gain in over two years. The major indexes are now all on pace for a weekly gain, extending Wall Street’s strong July rally.

    In a busy week of corporate earnings reports investors have focused on what companies are saying about inflation and the impact rising interest rates are having on their business and customers.

    Spirit Airlines shares rose 5.6 per cent after JetBlue said it agreed to buy the budget airline for USD3.8 billion to create the nation’s fifth largest airline. A day earlier, Spirit’s attempt to merge with Frontier Airlines fell apart. Frontier Airlines vaulted 20.5 per cent.

    In energy trading, benchmark US crude gained 40 cents to USD96.82 a barrel in electronic trading on the New York Mercantile Exchange. It lost 84 cents to USD96.42 on Thursday.

    Brent crude, the international pricing standard, gained 36 cents to USD102.19 a barrel.

    In currency trading, the US dollar fell to JPY132.67 from JPY134.27 late Thursday. The euro cost USD1.0247, up from USD1.0199.

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