Asian Markets at Close Report, by MarketWatch on July 7, 2016: Asian Markets Mostly Gain on U.S. Data Cheer
Asian shares generally rose on Thursday, as data indicating a strengthening U.S. economy offered some respite from the recent market turmoil.
South Korea’s Kospi SEU, +1.07% closed up 1% while Hong Kong’s Hang SengHSI, +1.03% gained 1%. China’s Shanghai Composite Index SHCOMP, -0.01% closed flat. Australia’s S&P/ASX 200 index XJO, +0.58% closed up 0.6%, after Prime Minister Malcolm Turnbull expressed confidence in forming a majority for his conservative coalition
In Japan, however, the yen’s continued strengthening against the U.S. dollar pared the Nikkei Stock Average’s NIK, -0.67% early gains, sending the index to end down 0.7%.
Asia’s relative calm on Thursday followed promising U.S. economic data released overnight. Service-sector activity there showed an increase in new orders and employment.
The Institute for Supply Management’s nonmanufacturing purchasing managers index rose to 56.5 in June from 52.9 in May. That was the highest reading since November.
“We are seeing calmer heads prevailing today,” said Chris Weston, chief market strategist at investment advisory firm IG. The ISM numbers provided a much-needed boost to sentiment even as Europe and the U.K. look fragile, he said.
Stocks in Australia held on to their gains even after global ratings firm Standard & Poor’s revised its outlook on the country to a negative from stable. “We believe that without remedial action, the government’s fiscal stance may no longer be compatible with the country’s high level of external indebtedness,” S&P said. The Australian dollar and government bond yields moved little as such an action was widely expected before the elections began.
Nervous traders continued piling into the yen, seen as a haven, pushing the currency higher against the dollar. The yen USDJPY, -0.18% touched 100.60 a dollar and was trading at ¥100.99.
A stronger yen hurts Japanese exporters as it makes their products more expensive compared with rivals in China, South Korea and Taiwan.
If U.S. nonfarm payroll data for June that is due Friday comes out strong, it may revive expectations for a rate increase by the Federal Reserve, helping push the dollar up against the yen, said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management. Until then, analysts expect the yen to suffer the fallout of the weaker dollar and the British pound.
Investors remained cautious though, hedging their bets against market volatility by buying gold. The metal GCQ6, -0.08% was trading up 0.2%.
Meanwhile, Asian currencies were modestly stronger even as the pound fell to its lowest against the U.S. dollar in more than three decades Wednesday. The Indonesian rupiah, the Singapore dollar and the Thai baht were trading stronger against the dollar. The pound’s GBPUSD, +0.6728% gains against the dollar moderated, trading at $1.296.
With government bond yields sinking world-wide—Japan’s 20-year bond yieldTMBMKJP-20Y, +76.09% turned negative on Wednesday and U.S. government debt yields also hit record lows—investors sought out higher yields where they could, such as on Indonesian government bonds.
The yield on the benchmark 10-year Indonesian rupiah bond LDBMKID-10Y, +0.00% slid to its lowest in two months as investors bought more of those bonds, with the Indonesian rupiah trading stronger than it was before the Brexit-related risk selloff.
—Ewen Chew, Kosaku Narioka, and Megumi Fujikawa contributed to this article.