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Asian shares firm as demand for tech stocks lifts Nikkei

Nikkei 225

China’s factory activity declined in June as the Caixin manufacturing survey showed a decline to 50.5, from 50.9 in May

Asian shares strengthened on Monday as demand for tech stocks lifted Japan’s market, while a data-packed week promises to be central to the outlook for the Chinese economy and U.S. interest rates.

China’s factory activity declined in June as the Caixin manufacturing survey showed a decline to 50.5, from 50.9 in May. That marginally beat market expectations of 50.2, but still underscored the weakening trend seen in other surveys.

China’s central bank has promised more “forceful” action to support the economy. Something major is required given Chinese blue chips declined 5 per cent last quarter while much of the developed world rallied.

As Japan found in the 1990s, it is hard work stimulating an economy seeing a considerable property plunge against a high sector debt and a declining population, ANZ analysts warned in a note.

On the contrary, hopes Japanese companies will fill any gaps created by Sino-U.S. splitting along with a weak yen raised the Nikkei around 20 per cent last quarter. The index jumped another 1.7 per cent on Monday to near 30-year highs.

A survey from the BoJ showed business sentiment improved in Q2 as easing supply constraints and the lifting of pandemic restrictions raised factory output and demand.

EUROSTOXX 50 futures and FTSE futures both advanced 0.4 per cent. S&P 500 futures and Nasdaq futures were stable prior to the July 4 holiday, having advanced over 6 per cent in June.

The tech sector could get another lift from news Tesla delivered a record 466,000 vehicles in Q2, topping market predictions of nearly 445,000.

That came after Apple surpassed $3trln in valuation for the first time on Friday and sealing the Nasdaq’s best quarter in 40 years.

BofA analysts noted the market value of the seven largest tech stocks had swelled by $4.1trln so far in 2023, while Apple, Microsoft and Alphabet taken together were worth more than the entire emerging market.

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