Posted by Kevin Buckland
TOKYO, Jul 5 (Reuters) – Asian stocks were mixed on Monday amid growing concerns over China’s crackdown on local tech companies, detracting from earlier earnings after a welcomed US job report pushed global stocks to record highs.
The region’s largest markets, Japan and China, both declined. The Nikkei fell 0.6% after a spike in COVID-19 infections in Tokyo just weeks before the city hosted the Olympics.
Chinese tech companies collapsed amid concerns over Beijing’s crackdown on ridesharing giant Didi Global and scrutiny of other platform companies in the country.
This pushed Chinese blue chips down 0.4% and Hong Kong’s Hang Seng down 0.8%, dragging MSCI’s broadest index for Asia Pacific stocks outside of Japan, which swung into negative territory.
Taiwan’s stocks rallied 1.2% while South Korea’s Kospi added 0.3%.
Trading has been thinner than usual with US markets closed over the long weekend of July 4th, meaning that “price movements may be choppy” and markets can “trade on their own regional idiosyncrasies rather than a macro theme “said Kyle Rodda, a market analyst at IG in Melbourne.
“But given Friday’s non-farm payroll numbers, things are still very, very optimistic and I think you’ll see that again later this week,” Rodda said.
“The conditions are right for stocks to continue to rise around the world.”
The MSCI All Country World Index closed last week at a record 724.66 and climbed slightly higher on Monday despite the Asian headwind.
European single stock futures showed marginal gains, with Euro Stoxx 50 futures marginally higher while FTSE futures rose 0.1%.
S&P 500 futures signaled a 0.2% decline to open on Tuesday after closing 0.8% higher on Friday to hit a record high. The Dow Jones Industrial Average rose 0.4% and the Nasdaq Composite rose 0.8%, also setting a record.
U.S. non-farm workforce rose more than 850,000 jobs last month. But the unemployment rate unexpectedly rose from 5.8% to 5.9%, while the closely watched average hourly earnings, a measure of wage inflation, rose 0.3% in the past month, lower than the consensus forecast for an increase of 0.4%.
“Goldilocks pressure suggests there is no need to speed up the tapering schedule or the implied rate hike profile,” Tapas Strickland, an analyst with National Australia Bank, wrote in a client note.
“Overall, the workforce is still 6.8 million below pre-February 2020 pandemic levels and still below the level of substantial progress needed by the Fed. So there is nothing in this report about that Fed could become restrictive. “
Eyes are on the minutes of last month’s Federal Reserve Open Market Committee meeting when policymakers surprised the markets by announcing two rate hikes by the end of 2023.
Comments from Fed officials have been more balanced since then, particularly from Chairman Jerome Powell, and investors are analyzing Wednesday’s press release for further clues about the timing of monetary tightening.
The dollar was largely unchanged on Monday after falling from a three-month high late last week under pressure from the weaker details of the US salary report.
The greenback was 0.1% stronger at 111.110 yen and rose slightly to USD 1.18615 to the euro.
Gold fell 0.1% to $ 1,785.03 an ounce.
Crude oil was tied to a range as the OPEC + talks dragged on. Saudi Arabia’s Energy Minister pushed back on Sunday against opposition from another UAE Gulf producer to a proposed OPEC + deal, calling for “compromise and rationality” to reach an agreement when the group meets again on Monday.
Brent crude rose 7 cents to $ 76.24 a barrel and US crude lost 4 cents to $ 75.20 a barrel.
(Adaptation by Sam Holmes)