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Asia Pacific Stocks Dip as Data Shows Singapore’s Economy Slumped in Second Quarter

Stocks in Asia Pacific fell in Tuesday morning trade, as China’s yuan-denominated trade data for June was released.

Mainland Chinese stocks dropped, with the Shanghai composite down 1.28% while the Shenzhen component dropped 2.122%.

In Japan, the Nikkei 225 slipped 0.84% while the Topix index declined 0.48%. South Korea’s Kospi shed 0.52%.

Shares in Australia also traded lower, with the S&P/ASX 200 down 0.76%.

Over in Southeast Asia, the Straits Times Index in Singapore dipped 0.84%. Singapore’s economy contracted 12.6% in the second quarter as compared to a year ago, according to advance estimates by the Ministry of Trade and Industry released Tuesday.

“Even with a widely expected bottoming in Q2, the worry is about a long hard slog back, with the path to recovery littered with uncertainty,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, wrote in a note. Still, he said: ”“A knee-jerk ramp-up on policy stimulus is not our base case, despite how grim the data appear.”

Overall, the MSCI Asia ex-Japan index traded 1.34% lower.

Oil prices fell in the morning of Asian trading hours, with international benchmark Brent crude futures down 2.01% to $41.86 per barrel. U.S. crude futures also declined 2.42% to $39.13 per barrel.

China’s yuan-denominated trade data for June was released on Tuesday, with exports rising 4.3% year-on-year while imports increased 6.2% as compared to a year earlier, according to customs data. China’s dollar-denominated trade figures for June are expected to be released later. The data was being watched for clues on China’s economic recovery following the imposition of lockdowns earlier in the year to curb the spread of the coronavirus.

World Health Organization Director-General Tedros Adhanom Ghebreyesus on Monday warned that “too many countries are headed in the wrong direction.”

“In several countries across the world, we are now seeing dangerous increases in Covid-19 cases, and hospital wards filling up again,” Tedros said. “It would appear that many countries are losing gains made as proven measures to reduce risk are not implemented or followed.”

Later on Tuesday stateside, some of the largest banks in the U.S. such as Citigroup and JPMorgan Chase are set to report their earnings.

Overnight on Wall Street, the S&P 500 closed 0.9% lower at 3,155.22 after briefly turning positive for 2020. The tech-heavy Nasdaq Composite dropped 2.1% to finish its trading day at 10,390.84 while the Dow Jones Industrial Average eked out a gain of 10.50 points, or less than 0.1%, to close at 26,085.80.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.577 after earlier bouncing from levels around 96.3.

The Japanese yen traded at 107.21 per dollar after weakening from the 106.8 against the greenback yesterday. The Australian dollar changed hands at $0.6934 after turbulent trading on Monday that saw it at levels above $0.698.