Asian shares mixed over US stimulus, China trade
Dollar weakens versus yen; Brent crude slips
BEIJING, Aug 5, (AP): Asian stock markets were mixed Wednesday amid investor concern about U.S. stimulus spending and a trade agreement with Beijing.
Shanghai and Hong Kong advanced while Tokyo and Sydney retreated. Gold, which has set a string of records, rose again after a deadly explosion in Beirut.
Investors are watching the stalemate among U.S. legislators over employment benefits for millions of Americans thrown out of work by the coronavirus pandemic and spending to shore up anemic economic growth.
At the same time, news reports from Washington said Chinese and American trade envoys will meet this month to review their “Phase 1” agreement aimed at ending a tariff war. That follows President Donald Trump’s threat to discard the agreement over Beijing’s handling of the coronavirus pandemic.
Trading in Asia was lackluster, “with the mood darkening on both the U.S. aid package and geopolitics fronts,” said Jingyi Pan of IG in a report.
The Shanghai Composite Index gained 0.3% to 3,381.35 while the Nikkei 225 in Tokyo lost 0.3% to 22,516.10. The Hang Seng in Hong Kong rose 0.6% to 25,088.36.
Gold rose $16.10 per ounce to $2,037.10.
Investors have been buying gold and silver, usually seen as a store of value if stock prices decline. Forecasters see that as an indicator of rising unease about the global economic outlook.
The explosion in Beirut killed at least 70 people, injured more than 3,000 and flattened much of the Lebanese capital’s port. The cause of the most destructive blast in the country’s history was unclear.
Global markets have recovered most of this year’s losses as investors look ahead to the possible development of a coronavirus vaccine. Forecasters warn the rebound might be too big and fast to be sustained by uncertain economic activity as infections rise in the United States and some other countries.
Legislators in Washington have failed to agree on a relief package including a replacement for $600 weekly unemployment benefits that expired last week.
The number of people filing for unemployment is rising after a resurgence of infections pushed some states to reimpose controls on business.
Economists expect a report Friday to show U.S. employers added 1.8 million jobs last month, which would be welcome growth but also a slowdown from June.
For now, investors are relying on the Federal Reserve, which said last week it would keep interest rates near zero. At the same time, Fed Chairman Jerome Powell said Congress needs to take action.
“Markets are betting on the Fed picking up the slack more permanently even from temporary fiscal stimulus lapses and convulsions,” said Hayaki Narita of Mizuho Bank in a report.
In energy markets, benchmark U.S. crude lost 11 cents to $41.59 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 69 cents on Tuesday to settle at $41.70 per barrel. Brent crude, the basis for pricing international oils, shed 6 cents to $44.37 per barrel in London. It gained 28 cents the previous session to $44.43.
The dollar declined to 105.58 Japanese yen from Tuesday’s 105.72 yen. The euro gained to $1.1818 from $1.1805.
U.S. stock indexes drifted higher Tuesday as Wall Street’s big rally eased off the accelerator.
The S&P 500 rose 11.90 points, or 0.4%, to 3,306.51 after flipping between small gains and losses throughout the day. It’s the mildest move for the index in two weeks.
The Dow Jones Industrial Average climbed 164.07 points, or 0.6%, to 26,828.47, and the Nasdaq composite added 38.37, or 0.4%, to close at another record, 10,941.17.
Stock indexes are hanging at or close to their record highs after clawing back all or most of their sell-off from earlier in the year, and the S&P 500 is within 2.4% of its all-time high set in February. But caution is still very prevalent across other markets: Gold rose to another record Tuesday, while Treasury yields sank as investors sought safety.
Within the stock market, energy companies had the biggest gains after the price of oil rose. But two in five S&P 500 stocks were lower following a mixed set of earnings reports.
On the winning end was Take-Two Interactive Software, which rose 5.9%. The video-game maker reported a profit for the spring that was almost double year-ago levels as customers stuck at home played Grand Theft Auto and other games instead of going outside.
It also raised its sales forecast for its fiscal year, a notable move when many companies have been shy to give any kind of prediction given all the uncertainty created by the coronavirus pandemic.
On the opposite end was insurer American International Group. AIG fell 7.5% for one of the larger losses in the S&P 500 even though it reported stronger results for the latest quarter than Wall Street expected. Some analysts cited several unusual items that clouded its report, such as COVID-related losses, which make it difficult to extrapolate how AIG’s profits will run from here.
In Washington, meanwhile, negotiations in the Capitol on a big economic relief package are ongoing. But multiple obstacles remain before a deal can be struck, one that investors say is crucial for propping up the economy in its weakened state.
A weekly $600 in federal unemployment benefits has expired, threatening to crunch the finances of millions of out-of-work Americans. Recent data reports have shown an uptick in the number of workers filing for unemployment benefits after a resurgence of coronavirus counts pushed some states to reimpose restrictions on businesses. Economists expect a report on Friday to show that U.S. employers added 1.8 million jobs last month, which would be welcome growth but also a slowdown from June.