Most Asian shares traded in a flat-to-low range on Thursday as the US government imposed new restrictions on technology investment in China amid inflation expectations. U.S. inflation will produce important results that also ease market sentiment.
A flurry of mixed earnings reports released this week also eased the mood as Sony Corp (TYO:
6758) and SoftBank Group Corp (TYO:
9984) indicates a continued slowdown in technology.
But that is partly offset by high earnings from car manufacturers and banks in Japan and Australia.
Focus is now on US consumer price index data due later in the day as markets turn risk-averse on fears of stronger data in July.
Chinese stocks plunge before new US restrictions
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell slightly on Thursday after three consecutive days of losses, while Hong Kong’s Hang Seng index fell 0.6%. US President Joe Biden on Wednesday signed an executive order that will block some new investments in Chinese technologies such as semiconductors and other tech-related sectors. The move is the latest development in a technology-related trade dispute between the world’s largest economies and could lead to more retaliation from China.
Pressure on China’s tech sector also comes at a time when China’s economy is grappling with a post-COVID economic recovery, as evidenced by a string of weak inflation and trade numbers this week. .
Chinese real estate shares plunged into the sixth consecutive session after big stock Country Garden Holdings (HK:
2007) said it had missed several bond payments, raising fears of a larger default in the sector.
Japan stocks rise amid mixed earnings and inflation risks
Japan’s Nikkei 225 index rose 0.4%, supported by a 5% gain from Honda Motor (TYO:
7267) after the automaker posted a strong June quarter thanks to strong car sales in the US. However, Nikkei’s larger gains were tempered by a 5.3% drop by Sony (NYSE:
SONY), as the tech and media conglomerate reported low earnings and signaled a slowdown in the smartphone market.
Thursday’s data also showed Japanese manufacturer inflation rose slightly more than expected in the 12 months to July, suggesting inflationary pressures in Asia’s second-largest economy are now mounting. .
The broader Asian markets were muted, with South Korea’s KOSPI losing 0.2% on losses in heavy tech stocks. Taiwan’s key index fell more than 1% on technology losses, with chipmakers and smartphone component makers coming under renewed pressure.
Australia’s ASX 200 Index edged up slightly and is heading for a third day of gains, following strong earnings from Commonwealth Bank of Australia (ASX:
CBA), the largest lender in the country. India’s Nifty 50 Index futures showed a weak open as investors took profits recently on potential hawkish signals about the Reserve Bank’s meeting later in the day.
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