Asia stocks up as China PMI, US data cheer markets

Asian shares rose on Tuesday after data showed China’s manufacturing sector grew more than expected in June, a hopeful sign for a global economy still struggling to recover from the sweeping impact of the coronavirus crisis.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.9 per cent, while U.S. stock futures, the S&P 500 e-minis, advanced 0.23 per cent.

Sentiment in the region, which got a boost from overnight gains on Wall Street thanks to strong housing data, got a further lift from a survey in China showing a quickening in activity in its vast factory sector.

The stock market in Australia, which has crucial economic links with China, rose 1.59 per cent, while shares in China gained 0.72 per cent.

Hong Kong stocks jumped 1.18 per cent, undeterred by the Chinese parliament’s passage of a security law that will increase Beijing’s control over the former British colony.

 

The Nikkei rose 2 per cent, shrugging off a larger-than-expected decline in Japanese industrial production.

Overall, however, Asian shares are still on course for a 7 per cent decline over the first half of this year, underscoring the severity of the pandemic-sparked losses and the challenges facing investors as global infections continue to rise in a blow to hopes of a quick recovery.

“Overnight moves in markets were not large but one does get the distinct impression that markets have got it both ways with equities rallying on rebounding data and bonds rallying on dismal COVID-19 news,” said ANZ Research analyst Rahul Khare.

Indeed, for the second quarter Asia ex-Japan shares were on course for a 17.8 per cent gain, which would be the biggest quarterly increase since the third quarter of 2009. Stocks appear to have received an added boost on Tuesday as some investors adjusted positions on the last trading day of the quarter.

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