Wall Street advance cut short as tech shares give up gains


Asia-Pacific equities started the week with gains as traders looked ahead to the start of US earnings season and expectations that data this week will show a return of Chinese economic growth in the second quarter.

Japan’s Topix benchmark was up 1.8 per cent on Monday morning in Asia while Australia’s S&P/ASX 200 gained 0.7 per cent and South Korea’s Kospi rose 1.3 per cent.

China’s CSI 300 of Shanghai- and Shenzhen-listed stocks added 0.2 per cent, while Hong Kong’s Hang Seng index was up 0.4 per cent.

Last week, mainland Chinese equities had their best week in five years as investors piled into a rally bolstered by signs of economic recovery and support from state media. The country’s stock market has risen 16 per cent in 2020, while benchmarks in Europe and the US remain down on the year.

S&P 500 futures were up 0.5 per cent in early Asia trading on Monday.

The gains came in spite of concerns that surging coronavirus cases in a number of US states could compromise an economic recovery.

Florida became the first state to record more than 15,000 cases in a single day on Sunday as infections continued to surge across the south of the country — a trend that is forcing the worst-affected states to impose new restrictions. 

On Friday, the S&P 500 added 1.1 per cent, after falling the previous day as three sunbelt states recorded their largest single-day increases in coronavirus-related deaths since the start of the pandemic.

Wall Street will be in the spotlight as earnings season gets under way this week, with Citigroup and JPMorgan among the first US banks to report.

Jingyi Pan, market strategist at IG, said Asia markets were benefiting from a perception that their economies were weathering the virus better than their western counterparts.

“So far I think the market’s been shrugging off a bit of the Covid-19 concerns,” she said, pointing to optimism ahead of Wednesday’s second-quarter China GDP reading. “It is perhaps the only Asian economy for which we’re expecting growth,” she said.

Economists forecast China’s economy to return to year-on-year growth in the second quarter, after GDP fell 6.8 per cent in the first quarter marking the first annual decline in more than four decades.

Evidence of a recovery in China would come at a time when fears of fresh Asia coronavirus outbreaks persist, with Hong Kong experiencing a new wave of cases over the past week. Melbourne, Australia’s second-biggest city, has been put under a fresh six-week lockdown to try to curb a renewed outbreak.

Demand for haven assets was muted, with US Treasuries flat. The price of gold edged up 0.3 per cent to $1,803.22 per ounce, after climbing above $1,800 last week for the first time since 2011. Data showed traders poured $40bn into funds backed by gold in the first half of the year.

Oil prices declined, with Brent crude, the international benchmark, dropping 0.8 per cent to $42.91 a barrel. 

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