Asia stocks mixed on patchy US economic data

AFP: Asian stocks ended mixed Thursday (6 August), with most markets taking a hit after patchy US economic data fed economic uncertainty while Tokyo got a boost from a weaker yen.

US data showing the service sector expanded to a record high in July strengthened the case for an earlier interest rate hike from the Federal Reserve, analysts said, providing a boost for the dollar.

The gains in the greenback pushed down the yen by comparison – a weaker Japanese currency makes exporters more competitive – and helped push up Tokyo stocks 0.24%, or 50.38 points, to close at 20,664.64.

US stocks pushed higher Wednesday day after the Institute for Supply Management said the service industry expanded 4.3% in July, but payroll firm ADP said the private sector added 185,000 jobs last month, below analysts’ estimate of 220,000.

“The weaker currency will be a tailwind for Japanese stocks. We’ll still see a focus on individual earnings results,” Yutaka Miura, a technical analyst at Misuho Securities, told Bloomberg News.

The Bank of Japan began a two-day meeting Thursday, with all eyes on signs of when policymakers may launch further easing measures.

Elsewhere, Seoul lost 0.81%, or 16.47 points, dragged down by technology firms and mobile carriers, to 2,013.29. Shanghai fell 0.89%, or 33.03 points, to close at to 3,661.54, while Hong Kong shed 0.57%, or 138.88 points, to 24,375.28.

Sydney slid 1.13% to close down 63.9 points at 5,610.10 after taking a hit from a jump in unemployment to 6.3% in July and news ANZ Bank will sell AUS$ 2.5 billion ($ 1.8 billion) of shares.

Analysts floated the possibility of an interest rate cut following the spike in joblessness, which came despite a hiring surge.

“The market is downplaying stronger jobs growth given the rise in unemployment,” Kieran Davies, chief economist at Barclays Plc in Sydney, told Bloomberg News. “I see a risk of a further rate cut given the Australian dollar still looks overvalued.”

Australia’s unemployment rate has edged up over the past year to its highest in almost a decade, while wages growth has been weak and business investment outside the mining sector remains soft.

Adding to concerns over the economy, mining giant Rio Tinto after the bell announced its first-half net profit had fallen 82%, hit by a supply glut and waning Chinese demand.

In Shanghai, a second day of losses after a recent market rout compounded fears for the Chinese economy.

The Shanghai Composite Index has tumbled nearly 30% from its highest point in June over fears for the health of the world’s second-biggest economy.

Investors are still jittery despite a raft of measures from Beijing to prop up the share market, including restrictions on short selling, the suspension of initial public offerings (IPOs) and a trading halt for some companies.

“The market needs its own strength to recover,” Zhang Haidong, chief strategist at Jinkuang Investment Management in Shanghai, told Bloomberg. “The coming economic data don’t seem to be good and will add additional pressure,” he said, referring to export and trade data due out this weekend.

US stocks finished mostly higher Wednesday, but a disappointing earnings report from Disney weighed on the Dow Jones Industrial Average. 

Traders are now focusing on Friday’s official US employment figures.

Oil prices were mixed as dealers digested an US energy report showing a big drawdown in crude stockpiles - but also an increase in domestic production.

US benchmark West Texas Intermediate for September delivery fell 17 cents to $ 44.98 while Brent crude for September gained nine cents to $ 49.68.

“Crude prices continued to remain weak with focus on oversupply,” said Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at business consultancy firm EY.

In forex trade, the dollar was near a two-month high against the yen on bets the Fed would hike rates in September.

The greenback bought 124.75 yen, against 124.88 yen in New York Wednesday when it briefly crossed the 125 yen level, its highest since early June. The euro stood at $ 1.0910 and 136.10 yen compared with $ 1.0904 and 136.18 yen in US trade.

Gold fetched $ 1,085.30 an ounce compared with $ 1,085.72 late Wednesday.