Asia-Pacific Shares

Asia-Pacific Shares Settle Mixed on Second Wave Concerns

The major Asia-Pacific stock indexes finished mixed but mostly lower on Monday as investors reacted to a rise in the number of coronavirus cases with most of the surge occurring stateside. The price action suggests investors are taking a cautious approach as they deal with the conflict between exuberance over the reopening of several economies and the real danger of second wave infections risk.

On Monday, Japan’s Nikkei 225 Index settled at 22437.27, down 41.52 or -0.18%. Hong Kong’s Hang Seng Index finished at 24515.23, down 128.66 or -0.52% and South Korea’s KOSPI Index closed at 2126.73, down 14.59 or -0.68%.

China’s Shanghai Index settled at 2965.27, down 2.36 or -0.08% and Australia’s S&P/ASX 200 Index closed at 5944.50, up 1.90 or +0.03%.

Rising Number of Coronavirus Cases in the US

Investors reacted to a jump in the number of COVID-19 cases in the U.S., with more than 30,000 new infections reported on Friday and Saturday – the highest daily totals since May 1 – according to data compiled by Johns Hopkins University.

Meanwhile, in China, an official said Sunday that Beijing is capable of screening almost 1 million people a day for the coronavirus. That development came in reaction to a recent cluster of infections that was found in the city.

China Holds Rates Steady

China kept its benchmark lending rate unchanged on Monday, with the 1-year loan prime rate left at 3.85%. The 5-year loan prime rate was also kept steady at 4.65%.

The move left the benchmark lending rate unchanged for the second straight month at its June fixing, matching market expectations, after the central bank kept borrowing costs on medium-term loans steady last week.

China’s Startup Board Index Hits 4-1/2-Year High on Fresh Reforms

China’s startup board index hit its highest in more than four years on Monday, as investors cheered Beijing’s fresh reforms in its capital markets to help bolster the world’s second-largest economy.

The start-up board ChiNext Composite Index climbed 1.01%, its highest since January 7, 2016.

Meanwhile, over the weekend, China said it would revamp its benchmark equity index by introducing more high-tech strength and removing loss-making companies.

The inclusion of STAR stocks in the SSEC will make its structure more reasonable and representative, as STAR companies represent the development direction of China’s economy, Ma Wenyu, analyst at Shanxi Securities noted in report.

The reforms would bode well for the equities market, while securities and tech stocks would benefit first, Ma added.

Tokyo Shares Dip on Worries Over Rising Coronavirus Cases

Japanese shares edged lower on Monday, moving in a narrow range, as worries about the growing number of coronavirus infections across the world kept investors on edge.

The World Health Organization reported a record increase in global coronavirus cases on Sunday, with the biggest rise in North and South America.

Sentiment was also weighed by iPhone maker Apple Inc. announcing a temporary shutdown of its 11 stores in Florida, Arizona, South Carolina and North Carolina on Friday.

The announcement hit Apple-related stocks in Japan, with Alps Alpine, Murata Manufacturing Co. Ltd. and Rohm Co. Ltd. Falling between 0.67% and 1.25%.

Some market players said the rising daily infections in Tokyo dampened hopes of Japan’s economic recovery, others noted that its impact was small.

“It is not regarded as a huge risk, at least in Japanese markets, since Japan is still far from an outbreak that could lead to restrictions being imposed again,” said Yutaka Masushima, market analyst at Monex Securities in Tokyo.

For a look at all of today’s economic events, check out our economic calendar.

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James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.