Asian shares boosted by stronger China factory data

Asian shares were mostly higher on Monday buoyed by further signs of recovery in China’s manufacturing sector.

Japan’s benchmark Nikkei 225 added 1.4% to 23,303.42 in morning trading, while South Korea’s Kospi gained nearly 0.9% to 2,287.17. Australia’s S&P/ASX 200 added 0.4% to 5,952.40. Hong Kong’s Hang Seng edged up 0.7% to 24,277.75, while the Shanghai Composite inched down less than 0.1% to 3,221.78.

The Caixin manufacturing PMI, a major indicator for China’s manufacturing sector, rose in October, showing that domestic demand is holding up. But if coronavirus cases continue to rise in the US and Europe, that’s likely to hurt China’s exports.

Still, a resurgence of outbreaks of Covid-19 has investors worried, on top of uncertainty over the US presidential election.

The government’s top infectious diseases expert has cautioned that the US will have to deal with “a whole lot of hurt” in the weeks ahead due to surging coronavirus cases. Dr Anthony Fauci said in a Washington Post interview that the US “could not possibly be positioned more poorly” to stem rising cases as more people gather indoors during the colder fall and winter months.

Aside from pandemic and election concerns, market players are looking ahead to a slew of earnings reports expected from Japan and the rest of the region, including automakers and video-game maker Nintendo Co.

“With voters in the US going to the polls this week, or more accurately, not going to the polls, having already cast their postal votes in huge numbers, Asia will be looking nervously westwards this week, wondering what the outcome will be and that it will mean for them,” said Robert Carnell, regional head of research for ING.

The focus is on US-China relations, but investors aren’t sure what change either outcome might bring on that issue. Although Democratic candidate Joseph Biden might go easier on tariffs, say he is unlikely to soften US policy on other issues such as human rights, Carnell said in a report.

Last week proved punishing for Wall Street, with the S&P 500 posting its first back-to-back monthly loss since the coronavirus pandemic first gripped the economy in March.

Investors have been cashing in gains from the recovery in the past several months, moving to lock in profits ahead of the election.

The S&P 500 dropped 1.2% to 3,269.96, ending the week with a 5.6% loss, its worst in seven months. Sharp drops in big technology stocks drove much of the selling, reflecting worries that expectations built too high for some of the market’s biggest stars, including Apple and Amazon.

The Dow Jones Industrial Average fell 0.6% to 26,501.60. The Nasdaq composite gave up 2.5% to 10,911.59.

In energy trading on Monday, benchmark US crude slipped $1.33 to $34.46 a barrel in electronic trading on the New York Mercantile Exchange. It lost 38 cents to $35.79 per barrel on Friday. Brent crude, the international standard, fell $1.30 to $46.64 a barrel.

The US dollar was unchanged at 104.66 Japanese yen. The euro cost $1.1645, down slightly from $1.1648.

‘Huge’ week ahead
Polls suggest a Biden win could come along with a Democratic sweep of both houses of Congress, which would likely see a huge spending package passed, though a win for Republicans in either of the races is expected to see a much smaller sum.

“Whichever way you look at it, this coming week will be huge for US and global markets,” Simon Ballard, at First Abu Dhabi Bank Pjsc, said.

All three main indexes on Wall Street finished in the red Friday, with the Nasdaq tumbling more than two per cent, ending their worst week and month since March.

Asian markets started brightly Monday, though initial big gains were pared.

Tokyo rose more than one per cent, Hong Kong added 0.8 per cent and Seoul put on 0.9 per cent, with Singapore up 0.7 per cent.

Shanghai rose 0.1 per cent, with some support coming from data suggesting China’s manufacturing sector continued to improve in October.

However, Taipei, Jakarta and Wellington all fell.

Oil prices tumbled more than three per cent as the reimposition of lockdowns causes worries about demand, while selling was also fanned by a pick-up in Libyan output in the wake of a peace deal to end almost 10 years of civil war.

Key figures around 0230 GMT
Tokyo – Nikkei 225: UP 1.4 per cent at 23,303.42 (break)

Hong Kong – Hang Seng: UP 0.8 per cent at 24,306.21

Shanghai – Composite: UP 0.1 per cent at 3,226.50

Euro/dollar: DOWN at $1.1644 from $1.1651 at 2050 GMT on Friday

Dollar/yen: DOWN at 104.65 yen from 104.67 yen

Pound/dollar: DOWN at $1.2938 from $1.2954

Euro/pound: UP at 90.00 pence from 89.90 pence

West Texas Intermediate: DOWN 3.4 per cent at $34.56 per barrel

Brent North Sea crude: DOWN 3.1 per cent at $36.76 per barrel

New York – Dow: DOWN 0.6 per cent at 26,501.60 (close)

London – FTSE 100: FLAT at 5,577.27 (close)

(Source: UNB, BSS)