TOKYO – Asian shares were mostly lower on Thursday as investors awaited US jobs reports to show signs of how to recover from the pandemic.
Japan’s benchmark Nikkei 225 slipped 0.4% to 28,707.04, while South Korea’s Kospi fell 0.5% to 3,281.79. Australia’s S&P/ASX 200 closed 0.5% lower at 7,274.00. The Shanghai Composite rose 0.3% to 3,600.64. Trade in Hong Kong was closed to mark the anniversary of the handover of the former British colony to Beijing.
The Bank of Japan’s quarterly “Tankan” survey showed continued improvement, with sentiment from large manufacturers remaining largely positive despite the pandemic.
According to Robert Cornell, regional head of Asia-Pacific research at ING, the headline survey showed an increase of 5 to 14 in the previous quarter, but it was lower than expected.
Tankan measures corporate sentiment by subtracting the number of companies saying that business conditions are negative, from those responding they are positive.
Carnell and others said Tanken’s findings suggest that the big jump in recovery for the world’s third-largest economy may already be over, meaning that from now on, the rebound will be steady but gradual.
“Risk factors such as the more contagious delta strain of COVID-19 and the US payroll report will continue to exist,” said Yep Jun Rong, market strategist at IG in Singapore.
“Although there has been optimism on the vaccine front to curb the delta variant, vaccination progress in this area will see some significant pick-up in tackling the spread,” Yep said.
Concerns remain as Asia lags behind the Americas and parts of Europe in vaccination and some countries endure their worst outbreaks yet.
On Wall Street, the S&P 500 gained 0.1%, bringing its advance to 8.2% over the past three months and to 14.4% for the first half of the year.
Stocks are weighing more on optimism that the economy is consolidating and the Federal Reserve will keep interest rates low for some time.
Investors are waiting for the government’s monthly jobs report to come out on Friday.
The S&P 500 index rose 5.70 points to 4,297.50. The Dow Jones Industrial Average rose 0.6% to 34,502.51. The Nasdaq Composite fell 0.2% to 14,503.95. The tech-heavy index touched record highs on Monday and Tuesday.
The Russell 2000 Index of shares of the smaller company rose 0.1% to 2,310.55.
Industrial, financial and energy companies were among the winners on Wednesday. Those gains were held back by a pullback in technology, communications and real estate stocks.
Many professional Wall Street investors say the stock could continue to rise from here, not as much as they did during the first half of the year.
Interest rates remain low, even though the Federal Reserve recently indicated it could start raising rates in about two years. And with the economy strengthening, proponents say stocks should be able to last longer, even if their prices climbed faster than corporate profits and looked expensive compared to history.
Some are more pessimistic, however, amid concerns that many of the growth measures in the economy have already reached their peak.
For example, Barry Bannister, chief equity strategist at Stifel, says US manufacturing growth likely tops in March. He sees a recent return of stimulus in China, which has led to slower growth around the world and helped propel the S&P 500 below 3,800 in the second half of the year.
So far this year, energy stocks have continued to edge higher, with 11 sectors up 42.4% in the S&P 500. Financials is the next biggest gainer, up 24.5%, while real estate companies are up 21.7%. The tech companies that were the biggest gainers in 2020 are up 13.2%. Utilities lag behind the rest of the market, gaining 0.8% in the first half of this year.
As inflation concerns have eased a lot during the quarter, this has helped generate tangible gains for technology companies. Tech stocks have been the biggest gainers in the quarter, with the S&P 500 rising 12.9%. This sector is seen as a high-growth area of the market, which tends to outperform when inflation is low.
In energy trading, benchmark US crude rose 12 cents to $73.59 a barrel in electronic trading on the New York Mercantile Exchange. It rose 49 cents to $73.47 on Wednesday. International benchmark Brent crude rose 8 cents to $74.70 a barrel.
In currency trading, the US dollar rose from 111.11 yen to 111.14 Japanese yen. The Euro is priced at $1.1843, which is less than $1.1855.