Asian Markets

Asian Markets Rise as Data Shows China’s Services Sector Grew in June

Stocks in Asia edged higher in Friday afternoon trade as positive economic data raised optimism over the prospects of an economic recovery from the coronavirus pandemic.

Mainland Chinese stocks rose by the afternoon, with the Shanghai composite jumping 1.04% and the Shenzhen component adding 0.681%.

In Japan, the Nikkei 225 added 0.2% while the Topix index was flat in afternoon trade. South Korea’s Kospi advanced 0.54%.

Over in Australia, the S&P/ASX 200 was flat. Overall, the MSCI Asia ex-Japan index gained 0.64%.

A private survey showed Friday that China’s services sector showed it growing at its fastest pace in over a decade in June, according to Reuters, with the Caixin/Markit services Purchasing Manager’s Index (PMI) coming in at 58.4 for the month. That was the highest print since April 2010, according to Reuters, and compared with May’s 55.0 reading. The 50 level in PMI readings separates growth from contraction on a monthly basis.

In the U.S., nonfarm payrolls surged by 4.8 million in June, according to the U.S. Labor Department. The figure smashed expectations by economists surveyed by Dow Jones of a 2.9 million increase in jobs created. The unemployment rate dropped to 11.1%, lower than the 12.4% forecast by economists surveyed by Dow Jones.

The Labor Department also said, however, that initial jobless claims rose by 1.427 million in the week ending June 27. Economists polled by Dow Jones expected initial U.S. jobless claims to rise by another 1.38 million.

Rodrigo Catril, senior foreign exchange strategist at National Australia Bank, wrote in a note that the nonfarm payrolls and jobless claims data “delivered contrasting images” of the state of the U.S. labor market.

“While June data reflected a big improvement in the US labour market, the recent sharp acceleration in new virus cases plus the prospect of an end to unemployment benefits by the end of July are two big layers of uncertainty,” Catril said. Numerous states in the U.S. have paused or reversed plans to ease restrictions as new coronavirus cases spiked countrywide. .”

“The question from here on is: Can you see continued economic data beats?,” asked Seth, who is Asia-Pacific equity strategist at the firm. “The moment we start seeing some disappointment, I guess the market will probably not like it.”

Oil prices slipped in the morning of Asian trading hours, with international benchmark Brent crude futures down 1.04% to $42.69 per barrel. The U.S. crude futures contract shed 1.06% to $40.22 per barrel.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 97.198 after earlier touching a high of 97.265.

The Japanese yen traded at 107.49 per dollar after seeing lows beyond 108 earlier in the trading week. The Australian dollar changed hands at $0.6925 following its rise this week from levels around $0.684.

Scroll to Top