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Asian stock markets drop on weak US services data


The ISM purchasing managers’ index dropped to 60.1 from May’s record 64.0

Asian stock markets followed Wall Street lower Wednesday after US services activity weakened.

Market benchmarks in Tokyo, Hong Kong and Seoul fell, while Shanghai swung between gains and losses.

Overnight, Wall Street’s benchmark S&P 500 index broke a seven-day streak of record closes and dropped after the Institute of Supply Management (ISM) reported service industry activity grew in June at a slower rate than forecast.

The ISM purchasing managers’ index dropped to 60.1 from May’s record 64.0. That was well below the 63.3 expected by forecasters surveyed by The Wall Street Journal.

The disappointing drop suggests the US economic recovery is not immune to global pockets of resurgence of the coronavirus, said Mizuho Bank in a report.

The Nikkei 225 in Tokyo dipped 1% to 28,363.82 and the Hang Seng in Hong Kong shed 0.7% to 27,881.92.

The Shanghai Composite Index was 0.2% higher at 3,535.34 at mid-morning after China’s Cabinet announced it would impose stricter data security and other standards on Chinese companies that want to join foreign stock exchanges.

The announcement, at a time when Beijing is tightening control over technology industries, is a potential hurdle for Chinese entrepreneurs who have raised billions of dollars abroad.

The Kospi in Seoul retreated 0.6% to 3,287.11 while the S&P-ASX 200 in Sydney added 0.7% to 7,316.00.

New Zealand, Singapore and Jakarta declined.

On Wall Street, the S&P dropped 0.2% to 4,343.54 on Tuesday, led by losses for banks and energy companies. The index is up 15.6% for the year.

The Dow Jones Industrial Average dropped 0.6% to 34,577.37. The Nasdaq Composite gained 0.2% to 14,663.64.

Travel, hospitality and other services industries have enjoyed a boom as US restrictions on consumer activity ease.

That pushed up US prices, but the latest measure could support the Federal Reserve’s position that the inflation spike is temporary. That could help to reassure investors the Fed and other central banks won’t feel pressure to cool price rises by rolling back economic stimulus.

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