Markets Sep 03

Asia trends higher on Wall St gains, China data

A solid performance by US markets helped lift their Asian counterparts on Thursday, but the tech sector was under pressure in Hong Kong 

Asia trends higher on Wall St gains, China data
A trader works on the floor of the New York Stock Exchange. File photo by AFP.

(ATF) Asian markets are trending higher this morning on the back of a solid Wall Street performance overnight and China’s strong economic data this morning has also lifted the mood.

The Caixin China General Services Business Activity Index came in at 54.0 in August, signalling continued recovery in services activity in August. While the reading is 0.1pp lower than July, the latest uptick extended the current sequence of growth to four months.

“It signalled continued recovery in services activity in August. Sub-indexes imply solid new businesses, improvement in services related employment and higher prices,” Goldman Sachs analysts said in a note.

Overnight, the Dow Jones Industrial Average jumped 1.59%, the S&P 500 advanced1.54%, after data showed US private payrolls expanded last month, with the Nasdaq Composite underperforming as investors rotated funds out of tech into old economy shares. The benchmark however added 0.98%.

This has fired up stocks in most of the region. Japan’s Nikkei 225 was up 1.35%, Australia’s S&P ASX 200 was 0.91% higher and China’s CSI 300 was flat. But Hong Kong’s Hang Seng index was lower as the tech sector was under pressure, reflecting Wall Street’s rotation theme. Alibaba, Tencent, Xiaomi, Meituan and JD.com were the leading losers.

Hong Kong markets are also depressed after business conditions worsened further in August, according to a Markit Hong Kong PMI reading. The PMI declined to 44.0 in August from 44.5 in July as the resurgence of coronavirus cases in early July and related tightening of virus control measures such as social distancing and closure of selected business operations weighed on activity growth.

“Confidence in the year-ahead outlook remained negative as firms expressed worries over not just tighter Covid-19 measures, but also a renewed US-China trade war dispute, increasingly cautious consumer behaviour, and business insolvency,” Bernard Aw, principal economist at IHS Markit, said.

"With unused capacity persisting across the private sector, the labour market is set to remain subdued in the coming months."

Asian credit markets are firm this morning as the Asia IG index is marginally tighter at 56-1/2/57-1/2 and the primary markets have seen the emergence of deals like Zhenro Properties’ greenbondsCK Asset’s perpetual notes, and BoComm’s dual trancher