Stocks

Asian stocks falter on global growth fears, weak US GDP data

Reuters July 30 | Updated on July 31, 2020 Published on July 31, 2020

Asian shares wobbled in a choppy session on Friday as abysmal economic data from the United States and rising global Covid-19 cases weighed on sentiment, despite strong U.S. tech earnings and signs of manufacturing recovery in China and Japan.

The U.S. dollar was also set for its worst month in a decade amid expectations the Fed will maintain its ultra-loose monetary policy for years.

U.S. GDP collapsed at a 32.9% annualized rate in the second quarter, the deepest decline on record, while jobless claims rose last week, adding to signs the momentum of economic recovery has slowed.

Those figures overshadowed positive manufacturing data from China and Japan. China's official Purchasing Manager's Index (PMI) data showed that factory activity grew in July for a fifth straight month and at a faster pace, defying expectations of a slowdown, while Japan's industrial output snapped four months of declines in June.[

"We are seeing some tentative signs of an improvement in global trade flows as economies reopen, but the overhang from recessionary conditions in the developed world and rising infection rates are kind of a focus for investors at the moment," said Ryan Felsman, senior economist at CommSec in Sydney.

After rising in early trade, MSCI's broadest index of Asian shares outside Japan turned lower by late morning. It was last down by 0.22%.

Australian shares slid 1.85% amid month-end profit-taking and Seoul's Kospi ticked down 0.2%. Japan's Nikkei dropped 1.87% as a stronger yen weighed on exporters.

Chinese blue-chips were last down 0.29% in a choppy session.

But futures resolutely pointed to a positive open on Wall Street on Friday after Apple, Amazon, Facebook and Alphabet reported quarterly earnings on the same day for the first time ever, all topping Wall Street estimates.

"All of them punched the lights out with respect to their earnings numbers," said National Australia Bank strategist Ray Attrill. "It looks like it should be a pretty risk positive run into the weekend."

E-mini futures for the S&P 500 rose 0.38%.

Deemed "stay-at-home" winners as millions of Americans were ordered indoors to contain the COVID-19 pandemic, shares of the largest U.S. technology companies have hit record highs in recent months as the coronavirus pandemic has thrown the economy into its steepest contraction since the Great Depression.

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Published on July 31, 2020
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