Asian Market Snapshot: Markets Mostly Up in Spite of Weak U.S. Economic Data

Although Wall Street struggled one day earlier, several Asian indices posted gains today. The major U.S. indices fell on Thursday as an increase in U.S. jobless claims dampened investor confidence. Seasonally adjusted initial unemployment claims rose by 19,000 to reach 479,000 during the week ending July 31, 2010 after a revised decrease of 8,000 in the previous week, the U.S. Department of Labor reported on August 5. (See RGE Critical Issue: U.S. Labor Market: Private Payrolls Anemic; Labor Force Decline Keeps Unemployment Rate Steady)

The MSCI Asia Pacific Index gained 0.73% to close at 121.55 while the MSCI Asia Apex 50 closed at 769.26, up 0.37% for the day.

In Japan the NIKKEI 225 was down 0.12% to close at 9,642.12. A report emanating from Tokyo pointed to a moderating recovery for the Japanese economy. The coincident index, an indicator of economic health, increased to 101.3 in June, up from 101.2 in May. The modest gain is a sign that economic growth is slowing in Japan.

In Hong Kong the Hang Seng Index advanced 0.59%.

China’s Shanghai Composite Index jumped 1.44%. Chinese stocks rose as investor concern over bank stress tests have eased.

India’s BSE SENSEX 30 lost 28.84 points or 0.16%.

The Korean KRX 100 slid down to 3,749.99 losing 0.12% on the day. Six out of nine sectors fell on the day with the oil/gas sector (down 0.74%) yielding the greatest loss.

In Australia the S&P/ASX 200 dropped 0.40 points or 0.01%.

On currencies the yen, renminbi and rupee appreciated against the dollar. In Russia the ruble has risen as investors expect the Russian central bank to promote a strengthening of the currency to offset rising food prices. The drought is responsible for the surge in food prices.

The yields for 10-year sovereign bonds rose in Japan (up 2.3 basis points), Australia (up 0.2 basis points) and New Zealand (up 0.2 basis points). BNP Paribas expects the JGB 10-year yield to test the 0.9% level due to a global downtrend in bond yields and a favorable supply/demand balance. On the downside, there are concerns that the long-term sector has already been overbought, while in the long-run accommodative policy without fiscal discipline is consistent with yield curve steepening. (See RGE Critical Issue: Will Japanese Government Bond Yields Stay Under 2%?)

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