Japanese Shares End Higher on Services Boost
Japanese shares rose on Monday, supported by utilities. The country continues to experience unprecedented heat in July. However, well-known department stores were the worst performers. Overall, investor sentiment remained subdued due to widespread fears of a global economic slowdown. Trading was slower in the US ahead of Monday’s Independence Day holiday. A wait-and-see approach is evident in investors and the price.
The Topix rose 1.34% to 1,869.71. Nikkei registered a weekly loss of 3.01%, and Topix dropped by 2.08%. Overall, 179 of the Nikkei’s 225 components were gained on Monday. Three were flat and 43 were lost. Given the absence of factors to encourage buying, the market is in the sharp decline zone seen last week.
Utilities gained 4.11%. This makes it the best performing sector on the Nikkei. Tokyo Electric Power rose 12.95%. Mitsubishi added 3.98% after falling 5.21% last week. SoftBank Group rose 2.96% after posting a weekly drop of more than 6%.
Fortress Investment was reported at the weekend to have offered $1.47 billion to buy Sogo & Seibu, the struggling department store unit of Seven & I Holdings. J. Front Retailing fell 5.63% after it released sales figures for its Matsuzakaya and Daimaru stores. Isetan Mitsukoshi lost 4.24% to join J. Front Retailing as the worst performer on the Nikkei. KDDI lost 1.67%. It experienced huge network issues over the weekend. Euro STOXX 50 futures rose 0.96% before markets opened in Europe. FTSE futures added 1.1%.
China Shares Boost on Healthcare Rise
Chinese shares rose on Monday, supported by healthcare stocks and the launch of the cross-border investment scheme ETF Connect. Hong Kong stocks were dragged down by airline operators. The CSI300 rose 0.7%. The Shanghai Composite added 0.5%. The Hang Seng index fell by 0.1%. Investors began trading exchange-traded funds on markets. However, more money is expected to flow into the mainland, initially under ETF Connect. Only four Hong Kong-listed ETFs qualify, compared to 83 products traded in Shanghai and Shenzhen; Yields are heavily skewed toward funds that invest in China-listed stocks.
Tracking China’s healthcare stocks rose 4.7% due to possible signs of the spread of COVID-19 in China. Parts of eastern China are conducting new rounds of mass COVID-19 testing. The country is facing new waves of infections from the impact of spring epidemics that hit Beijing and Shanghai. The number of infections in China increased to more than 300 over the weekend. Compared to several dozen at the end of June.
Tourism and transport shares fell. China’s “Big Three” state-owned airlines have been downgraded. Both China and Hong Kong after they pledged to buy a total of nearly 300 Airbus planes on Friday. This is the largest order by Chinese carriers since the beginning of the pandemic. Hong Kong shares of Air China fell 4.1%. It is worth noting that this is the worst day in the last two months. Shares of China Eastern Airlines and China Southern Airlines also fell. Great Wall Motor’s Hong Kong shares fell 6%. After General Motors said on Friday it had halted the sale of a shuttered Indian plant to the Chinese automaker.
South Korea Shares Dip
South Korea’s shares dropped for the fourth day in a line. It hit a new 20-month low on Monday. Investors fear that the US Federal Reserve’s move to curb inflation could lead to a deeper-than-expected economic recession. The local currency (won) rose against the dollar. After volatile trading, the Kospi fell by 5.08 points to close at 2,300.34. This is the lowest since November 2020 at 2,300.16 points. Trading volume was light 461.9 million shares, worth $5.57 billion.
According to analysts, the market continues to fluctuate. Investors are cautious about the Fed’s rate plans and fear a recession. Against the backdrop of the absence of new market-boosting factors. Major US indexes reversed earlier losses to end higher on Friday.
The US Institute of Supply Management’s Purchasing Managers’ Index rose to 53. This was below market expectations and below the previous month, adding more weight to the view that the economy is slowing. Hence, inflation may reach its peak. Hyundai fell 3.36 percent. LG Chem lost 1.77 percent.
Samsung Electronics advanced 1.6 percent. SK hynix rose 1.83 percent. The local coin finished at 1,297.10 against the dollar. Kosdaq lost 6.75 points. Bond prices, which move inversely to yields, are closed mixed. The three-year government bond interest rate increased by 0.7 basis points. The benchmark 10-year government bond yield lost 11.8 basis points.