Asia Slips While European Stocks Rise

Highlights:

• USA
  On Wall Street, the Dow Jones increased by 0.61% or 210 points; The S&P 500 gained 0.13% posting a new record, while the Nasdaq dipped by 0.2%.
• ASIA
  Nikkei yielded 0.29% or 84.49 points, to 28,707.04. Despite improvement in business sentiment, investors are focused on the development of the new Delta variant of Covid-19.
• Kospi is down 0.44% or 14.62 points to 3,282.06.
  Chinese shares fell after China’s PMI for June. The Shanghai Composite Index yielded 0.07%, Hang Seng lost 0.57%.
• EUROPE
  STOXX 600 is trading with a rise of 1%, with investors focusing on signs of economic recovery, shaking off concerns about inflation and a spike in infections.

Wall Street Closed with Gains the First Six Months of 2021 

At the close of Wall Street on Wednesday, S&P 500 ended its four consecutive days of profits and a solid first half of the year. 

The US recovery continues with an increase in inflation that is perceived as increasingly transitory.

The Dow Jones Industrial Average increased by 210 points, with a support of a 2.7% rise in Walmart. The S&P 500 gained 0.13% to close at a fresh record of 4,297.50. At the same time, the Nasdaq Composite dipped by 0.2% resulting from lower closes of Facebook, Amazon, Netflix, and Google-parent.

At the end of the first six months of 2021, the Dow Jones added 12.73%, the S&P 500 hiked by 14.41%, and the Nasdaq gained 12.54%.

In June, the Dow Jones lost a slight 0.28%. Meanwhile, the S&P 500 has gained 2.20%, and the Nasdaq added 5.43%, and they are in record terrain.

 

The US economy is advancing at a faster pace than expected

The stock market underwent its worst week since October after the Fed raised its forecasts for price increases. The central bank stated that it has begun to talk about normalization in monetary policy and brought the first interest rate hikes forward to 2023.

Consumer prices in the US in May registered a 5% year-on-year rise, the highest since 2008. Still, the central bank has insisted that the boom is due to the reopening of the economy after months paralyzed by the virus and that the pressures would be temporary.

In the end, investors have continued to bet on buyouts in hopes of benefiting from the recovery. The 1.2 trillion infrastructure plan promoted by President Joe Biden, which has earned bipartisan support in the Senate, also contributed to it.

The vaccination process is in progress in the US, where 60% of adults have already received at least one dose against the coronavirus. However, the evolution of a new Delta variant in other countries and its impact is disturbing. 

Nikkei closed in red due to an increase in Covid-19 infections

Nikkei yielded 0.29% this Thursday due to fears of tightening anti-covid measures. The country is experiencing a rapid increase in infections in and around Tokyo. 

The Nikkei lost 84.49 points, to 28,707.04. The Topix, including the companies with the highest capitalization, lost 0.22% or 4.36 points, to stand at 1,939.21.

The Tokyo stock market was hindered by the decline in the technology sector and profit-taking in sectors such as transportation following recent earnings reports.

Investors in the Japanese stock market barely reacted to the improvement in business sentiment among the country’s large companies. It stood at the highest level in 2018 in its March quarterly report. Investors took a cautious stance instead, considering the potential impact of an increase in covid cases.

The maritime transport sector recorded the largest losses of the day. Information and communication sectors and metal products followed it.

Mitsubishi Electric plummeted by 6.04%, which is the most significant drop among Nikkei-listed companies.

The transportation companies Kawasaki Kisen Kaisha and Mitsui OSK followed in decline, dropping by 4.63% and 3.93%, respectively.

The semiconductor component maker Lasertec had the most significant trading volume of the day and added 0.27%.

The Softbank group slumped by 0.63%, and the vehicle manufacturer Toyota lost 0.2%. Meanwhile, Sony expanded by 1.15%, and its competitor Nintendo decreased by 0.17%.

Worries about the Delta strain pulls Kospi down 

Kospi decreased by 0.44% or 14.62 points to 3,282.06 this Thursday. Concerns about the spread of new, more contagious variants of Covid-19 reduced investor risk appetite. 

The Kosdaq Technology Stock Index surged by 0.55% or 5.68 points to 1,035.64. The strong performance of the pharmaceutical and healthcare sectors contributed to this new record high.

The country’s authorities decided to hold social distancing measures in the Seoul area for a week. As a result, the South Korean stock market opened in red and has been pessimistic since then. 

According to Lee Jin-woo, Meritz Securities analyst, reveals concerns about the Delta strain impacting cyclical stocks.  

Samsung Electronics fell by 0.74%. Meanwhile, SK Hynix declined by 2.35%.

South Korea’s top internet provider Naver lost 1.08%, and its competitor Kakao dropped by 1.84%.

As for the winners of today’s session, the pharmaceutical company Samsung Biologics advanced by 1.66%. Besides, Samsung SDI, the manufacturer of rechargeable batteries, gained 3.72%.

Hyundai Motor, the largest South Korean carmaker, hiked by 1.04%, while the chemical firm LG Chem values fell by 0.59%.

The won decreased by seven units against the US dollar, trading at 1,133.10 won during the session’s close.

China’s manufacturing data pulled Chinese shares down

Mainland Chinese stocks declined today. The Shanghai Composite Index dropped by 0.07%. Meanwhile, the Shenzhen Component Index sank by 0.81%.

China’s official manufacturing PMI for June was released Thursday. It showed that factory activity growth decreased in June. Besides, the Caixin/Markit manufacturing Purchasing Managers’ Index for June stood at 51.3 compared to May’s 52.0. 

As a result of the economic data, Asia-Pacific shares closed in the red.

Losses in the real estate sector dragged down the Hang Seng, falling by 0.57% on the day, settling at 28,827.95. The Hang Seng China Enterprises lost 0.87%.

The four sub-indices ended in red. The Real Estate sector lost 1.02%, the Commerce and Industry yielded 0.7%, while Finance dropped by 0.3%, and Services settled with a loss of 0.23%.

European shares rose on investors’ optimism

European stocks started with gains on Thursday. Traders began to bid up cyclical equities, which is a sign of optimism. 

Positive corporate results supported investors shaking off concerns about an increase in inflation and the new Covid-19 variant. 

At the time of writing, STOXX 600 posted an increase of 1.0% after the fifth straight quarter of gains on Wednesday. The index is set for its best session in more than a month.

Travel-related shares surged by 2.3%. EasyJet, British Airways owner IAG, and Ryanair added between 3% and 4%. 

The Italian stock market expanded by 1%, while France added 1.1%. The French group Sodexo soared by 5% due to increasing profit margin forecasts. 

Meanwhile, German Dax also hiked by 1% due to a rebound in retail sales in the country.

European economic sentiment showed a clear improvement in June.

Main European equities posted monthly increases. Paris advanced by 0.94%. Frankfurt gained 0.71%, and London added 0.21%. In contrast, Milan fell 0.27%.