Asian shares advance despite weaker factory data, outbreaks

Shares were mostly higher in Asia on Wednesday despite new data showing factory activity slowed this month as virus outbreaks disrupted shipping at some Chinese ports.

Markets advanced in Shanghai, Sydney and Seoul but slipped in Tokyo and Hong Kong.

Japan, South Korea, and China all released data that “erred on the side of slightly disappointing,” Jeffrey Halley of OANDA said in a commentary, adding that “it looks like softening demand from key export markets, exacerbated by chip shortages and logistic logjams, are muting orders across many sectors.”

Japan’s industrial output fell 5.9% in June from the month before while South Korean production fell 0.7%.

A key measure of Chinese factory activity, the purchasing managers index, remained just barely in a state of expansion.

Pandemic precautions due to outbreaks of coronavirus at some ports in southern China have been disrupting shipping, analysts say.

Some signs of weakness can reassure investors worried that central banks and governments might withdraw the lavish support for markets that has powered them to record highs after a slump early in the pandemic.

Tokyo’s Nikkei 225 index edged 0.1% lower to 28,791.53. In Seoul, the Kospi gained 0.4% to 3,300.33 and the Shanghai Composite index added 0.3% to 3,584.06. Sydney’s S&P/ASX 200 climbed 0.4% to 7,330.50.

In Hong Kong, the Hang Seng index fell 0.4% to 28,879.87. Shares rose in India and and Taiwan.

The biggest data release this week will be Friday’s U.S. jobs report for June. Economists expect it to show American employers created 675,000 more jobs than they cut, with the unemployment rate falling to 5.7%.

Job growth has been choppy recently, with gains falling disappointingly short of economists’ expectations in recent months. That’s key because the Fed is likely to keep up its support for the economy through low interest rates as long as the job market looks like it needs help.

Pending Friday’s update, markets were listless Tuesday.

The S&P 500 inched up less than 0.1% to 4,291.80, adding to its all-time high set a day earlier. More stocks fell than rose within the index, but gains for tech companies made up for weakness for banks and utilities.

The Dow Jones Industrial Average also edged less than 0.1% higher, to 34,292.29. The Nasdaq composite added 0.2% to 14,528.33.

Stocks have set their recent records on optimism that the economy is strengthening and that the Federal Reserve will keep interest rates low for a while longer.

A report released Tuesday showed a measure of confidence among U.S. consumers is continuing to rise, beating economists’ expectations for a slight decline. That’s key for an economy made up mostly of spending by consumers.

A separate report showed that home prices across the country rose again in April, continuing their blistering pace.

With one day left in June, the market is getting ready to close out a strong first half of the year. The S&P 500 is on track for a gain of 14.3%, more than double its average for a full year, going back to the start of the millennium.

Major banks announced plans to return billions of dollars to their shareholders through dividend increases and stock buybacks after passing the Federal Reserve’s most recent “stress tests.”

The central bank has stuck by its position that high inflation is likely to be only temporary. That would allow it to keep interest rates low for longer than it otherwise would.

Long-term bond yields have leveled out after jumping earlier in the year in part because of inflation concerns. The yield on the 10-year Treasury was steady at 1.48%.

In other trading, U.S. benchmark crude oil gained 30 cents to $73.28 per barrel in electronic trading on the New York Mercantile Exchange. It gained 7 cents to $72.98 per barrel on Tuesday. Brent crude, the international standard, picked up 15 cents to $74.43 per barrel.

The U.S. dollar was trading at 110.47 Japanese yen, down from 110.52 yen. The euro rose to $1.1900 from $1.1898.