Asian stocks mixed after Wall St rally on economic optimism

Asian shares were mixed on Tuesday after a Wall Street rally that reflected some optimism about the economy recovering from the pandemic.

Japan’s benchmark Nikkei 225 lost early gains and fell nearly 0.2 per cent to 30,038.44 in morning trading. South Korea's Kospi edged up 0.1 per cent to 3,125.19. The Shanghai Composite slipped 0.1 per cent to 3,479.84. Hong Kong trading was closed for Easter.

Yoshimasa Maruyama, chief market economist at SMBC Nikko, noted a gradual recovery in the Japanese economy had been reflected in the recent “tankan” Bank of Japan survey, which was released last week. He said a rebound was marked in electronics because of households consuming electronics goods, as the pandemic had squelched people’s spending on services.

Also read: Covid fears likely to keep market under pressure

However, household spending data released on Tuesday showed a 6.6 per cent decline in February, with dining, clothing, transport and entertainment falling sharply.

Deep worries remain over the pandemic, with medical experts warning Japan to brace for a “fourth wave” of surging infections and deaths related to Covid-19, as the nation has fallen behind the rest of the world in testing and vaccinations.

Similar outbreaks have flared in other countries, including India and Thailand.

On Wall Street, the S&P 500 rose 1.4 per cent to 4,077.91, another record high. The Dow Jones Industrial Average rose 379 points, or 1.2 per cent, to 33,527.19 and the Nasdaq was 1.6 per cent higher, at 13,705.59.

The gains came after the US government reported that employers went on a hiring spree in March, adding 916,000 jobs, the most since August.

Traders had a delayed reaction to the encouraging jobs report, which was released on Friday when stock trading was closed. Investors were further encouraged by a report on Monday showing that the services sector recorded record growth in March as orders, hiring and prices surged.

Both employment and the services industry have been lagging other areas of the economy throughout the recovery. Analysts have said that both need to show signs of growth in order for the recovery to remain on track. In the US, the strong roll-out of vaccinations is making an eventual return to normal for many people seem clearer and closer.

“The jobs report underscored the rebound in the labour market,” said Quincy Krosby, chief market strategist at Prudential Financial. “The only thing that can stymie this rebound, this recovery, will be that Covid-19 launches another wave.” The gains were broad on Monday, with nearly every sector rising. Companies that stand to benefit from a broader reopening of the economy and economic growth also did well. Norwegian Cruise Line jumped 7.2 per cent for the biggest gain in the S&P 500 as it seeks permission to restart cruises out of US ports in July with a vaccination requirement for passengers and crew members. Rival Carnival rose 4.8 per cent and Royal Caribbean gained 3.5 per cent.

Technology stocks also powered the gains. Apple rose 2.1 per cent and Microsoft gained 2.5 per cent. Tesla surprised investors with a report that vehicle deliveries doubled during the first quarter. Its shares surged 5.1 per cent.

In energy trading, benchmark US crude added 69 cents to $59.34 a barrel in electronic trading on the New York Mercantile Exchange. It gave up $2.80 to $58.65 per barrel on Monday. Brent crude, the international standard, rose 56 cents to $62.71 a barrel.

In currency trading, the US dollar rose to 110.24 Japanese yen from 110.19 yen. The euro cost $1.1811, down from $1.1813.

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