Japan’s Nikkei 225 and TOPIX indexes were the best performers in Asia, gaining 0.8% and 0.4%, respectively
Most Asian stocks gained on Thursday amid increased optimism over lower U.S. interest rates, but overall gains were limited as a downward revision in payrolls data spooked markets.
Japanese stocks were by far the best performers for the day, as PMI data showed sustained growth in the country’s services sector. But Chinese markets lagged, while gains in most other Asian markets were limited.
Regional markets took a mildly positive lead-in from Wall Street, as the minutes of the Fed’s late-July meeting showed more policymakers in support of an interest rate cut.
U.S. stock index futures were flat in Asian trade. But optimism over a rate cut was offset by data showing a severe downward revision in U.S. payrolls data in the year to March 2024, drumming up concerns that a slowing labour market could spur a potential recession in the country.
Japan’s Nikkei 225 and TOPIX indexes were the best performers in Asia, gaining 0.8% and 0.4%, respectively.
Sentiment towards Japan was buoyed by PMI data showing the services sector marked strong growth for a second successive month, as local demand was boosted by improving wages.
While Japan’s manufacturing PMI still declined more than expected, overall business activity remained in expansion.
Strength in the Japanese economy furthers the possibility of more interest rate hikes by the BoJ this year, which could present some headwinds for local markets. But stocks with exposure to domestic demand are expected to benefit from this trend.
Japanese consumer inflation data, due on Friday, is expected to offer more cues on the economy.
Broader Asian markets logged much smaller gains, as optimism over interest rate cuts was tempered by renewed concerns over a U.S. recession.
China’s Shanghai Shenzhen and Shanghai Composite indexes declined 0.3% and 0.1%, respectively, with sentiment towards the country showing little signs of improvement. Both indexes were at six-month lows.
A rebound in heavyweight technology and e-commerce stocks helped Hong Kong’s Hang Seng index gain 0.6%, although the index was nursing steep losses from the previous session.
South Korea’s KOSPI was flat after the Bank of Korea kept interest rates unchanged as expected, citing a need to keep inflation in check, even as the case for eventual rate cuts grew amid softening economic conditions.
Australia’s ASX 200 added 0.2%.
