Asian stock markets are trading mostly lower on Tuesday, despite the broadly positive cues from Wall Street overnight, amid rising prospects of the Federal Reserve resorting to aggressive policy tightening to combat rising inflation. Traders remain cautious ahead of this week’s key inflation report from the U.S. which will offer cues on the interest rate outlook. The Asian markets closed mostly higher on Monday.
Market participants also await a European Central Bank (ECB) policy meeting on Thursday for confirmation whether the central bank will raise rates at the July 21 policy meeting.
The Australian stock market is significantly lower on Tuesday, extending the losses in the previous session, with the benchmark S&P/ASX 200 falling below the 7,200 level, despite the broadly positive cues from Wall Street overnight, dragged largely by gold miners, financials and technology stocks. Traders are cautious as they brace for back-to-back interest rate hikes at the Reserve Bank of Australia’s monetary policy meeting later in the day.
The benchmark S&P/ASX 200 Index is losing 63.20 points or 0.88 percent to 7,143.10, after hitting a low of 7,137.60 earlier. The broader All Ordinaries Index is down 66.90 points or 0.90 percent to 7,366.20. Australian stocks closed modestly lower on Monday.
Among the major miners, Rio Tinto is gaining almost 1 percent, Mineral Resources is advancing almost 2 percent and OZ Minerals is adding more than 1 percent, while Fortescue Metals is losing almost 1 percent. BHP Group is flat.
Oil stocks are lower, with Beach energy and Origin Energy edging down 0.5 percent each, while Santos is losing more than 1 percent. Woodside Energy is edging down 0.1 percent.
Among tech stocks, Xero is losing more than 1 percent and Zip is sliding almost 4 percent, while Afterpay owner Block and WiseTech Global are slipping almost 2 percent each. Appen is edging up 0.5 percent.
Gold miners are weak. Newcrest Mining and Resolute Mining are losing more than 1 percent each, while Northern Star Resources and Evolution Mining are down almost 1 percent each. Gold Road Resources is slipping more than 2 percent.
Among the big four banks, Commonwealth Bank and National Australia Bank are losing more than 1 percent each, while Westpac is down almost 1 percent and ANZ Banking is edging down 0.4 percent.
In economic news, the total number of building permits issued in Australia was down a seasonally adjusted 2.4 percent on month in April, the Australian Bureau of Statistics said on Tuesday – coming in at 14,908. That was in line with expectations following the 19.2 percent plunge in March. On a yearly basis, total dwelling approvals were down 32.4 percent, approvals for houses sank 33.7 percent and approvals for dwellings excluding houses dropped 28.7 percent.
The Reserve Bank of Australia will also wrap up its monetary policy meeting on Tuesday and then announce its decision on interest rates, highlighting a modest day for Asia-Pacific economic activity. The RBA is expected to hike its benchmark lending rate by 25 basis points, from 0.35 percent to 0.60 percent.
In the currency market, the Aussie dollar is trading at $0.717 on Tuesday.
The Japanese stock market is modestly higher in choppy trading on Tuesday, extending the gains in the previous two sessions, with the Nikkei 225 moving above the 28,000 mark, following the broadly positive cues from Wall Street overnight, with Japan getting ready to welcome international tourists this weekend, which will be a boost to the economy. The government is also planning to restart its “Go To Travel” subsidy program as early as this month to encourage domestic travel.
The benchmark Nikkei 225 Index closed the morning session at 28,031.15, up 115.26 points or 0.41 percent, after touching a high of 28,052.42 and a low of 27,863.38 earlier. Japanese shares ended modestly higher on Monday.
Market heavyweight SoftBank Group is gaining more than 1 percent, while Uniqlo operator Fast Retailing is edging down 0.4 percent. Among automakers, Honda is gaining almost 3 percent, while Toyota is adding 1.5 percent.
In the tech space, Advantest is gaining more than 2 percent and Screen Holdings is adding more than 1 percent each, while Tokyo Electron is losing almost 2 percent. In the banking sector, Sumitomo Mitsui Financial is gaining almost 2 percent, while Mitsubishi UFJ Financial and Mizuho Financial are adding more than 2 percent each.
The major exporters are higher, with Sony edging up 0.5 percent, while Panasonic and Canon are gaining almost 1 percent each. Mitsubishi Electric is flat.
Among the other major gainers, Mazda Motor and NTN are gaining more than 4 percent each, while Casio Computer, JTEKT and Hitachi Construction Machinery are slipping almost 4 percent each. Unitika, Subaru, Konica Minolta and Taiyo Yuden are adding more than 3 percent each.
Conversely, Kikkoman and NTT Data are losing more than 2 percent each.
In economic news, the average of household spending in Japan was down 1.7 percent on year in April, the Ministry of Internal Affairs and Communications said on Tuesday – coming in at 304,510 yen. That missed expectations for a decline of 0.8 percent following the 2.3 percent drop in the previous month. On a monthly basis, household spending rose 1.0 percent – again shy of expectations for an increase of 1.3 percent and down from 4.1 percent in March. The average of monthly income per household stood at 539,738 yen, down 3.5 percent from the previous year.
In the currency market, the U.S. dollar is trading in the higher 132 yen-range on Tuesday.
Elsewhere in Asia, New Zealand and South Korea are up 1.2 and 1.4 percent, respectively. Hong Kong, Singapore, Malaysia and Taiwan are lower by between 0.2 and 0.6 percent each. Indonesia and China are up 0.4 and 0.2 percent, respectively.
On Wall Street, stocks closed higher on Monday despite coming off early highs amid somewhat thin volumes as traders largely stayed on the sidelines due to a lack of major economic data. Relaxation of coronavirus restrictions in Shanghai, and reports that the Biden administration is looking at the option of lifting some tariffs on China to fight inflation helped underpin sentiment.
The major averages all closed in positive territory despite coming off early highs. The Dow ended the session with a gain of 16.08 points or 0.05 percent at 32,915.78, te S&P 500 ended with a gain of 12.89 points or 0.31 percent at 4,121.43 and the Nasdaq settled at 12,061.37, up 48.64 points or 0.4 percent from the previous close.
The major European markets all also moved to the upside on the day. The U.K.’s FTSE 100 advanced 1 percent, Germany’s DAX surged 1.34 percent and France’s CAC 40 climbed 0.98 percent.
Crude oil futures pared early gains and settled lower on Monday after Saudi Arabia substantially raised crude prices for July. West Texas Intermediate Crude oil futures for July ended lower by $0.37 or 0.3 percent at $118.50 after climbing to $121 a barrel earlier in the session.
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