Asian Stocks Up Despite “Long Way” to COVID-19 Economic Recovery

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By Gina Lee

Investing.com – Asian stocks were mostly up on Monday morning, starting August with gains which were capped by increasing investor worries over a slowing economic recovery from the COVID-19 virus.

China reported a strong Caixin manufacturing Purchasing Managers Index (PMI) reading of 52.8 earlier in the day, indicating that the Chinese manufacturing sector continued to expand in July. The reading also corroborated the official manufacturing PMI of 51.1 released on Friday.

China’s Shanghai Composite was up 0.97% by 11:23 PM ET (4:23 AM GMT) and the Shenzhen Component gained 1.77%.

“There is going to be a recovery – we shouldn’t lose track of that as we go through this period,” Anne Anderson, head of fixed income at UBS Asset Management Australia, told Bloomberg.

“But returning to where we were before we started is going to be a real challenge and is going to require ongoing monetary and fiscal support. It’s a long way out of here, unfortunately,” she warned.

The U.S. Congress failed to reach an agreement over the latest stimulus measures before some earlier measures expired on Friday. Although White House Chief of Staff Mark Meadows told CBS on Sunday, “I’m not optimistic that there will be a solution in the very near term,” negotiations for the bill are expected to continue in the forthcoming week.

Japan’s Nikkei 225 jumped 1.95% (2:45 AM GMT) and South Korea’s KOSPI was down 0.14%. South Korea’s manufacturing activity shrunk at a slower pace than the previous month, with the Nikkei purchasing managers’ index (PMI) rising to 46.9 in July from 43.4 in June. Although the highest reading since January, the figure was still below the 50-threshold separating expansion from contraction.

Down Under, the ASX 200 was up 0.15%, reversing earlier losses. Victoria state declared a state of disaster on Sunday and tightened its existent lockdown measures after reporting 671 COVID-19 cases. Meanwhile, the Reserve Bank of Australia will hand down its interest rate decision on Tuesday.

Hong Kong’s Hang Seng Index slipped 1.06, with Chief Executive Carrie Lam announcing on Friday that the city would postpone its Legislative Council elections, originally scheduled for September 6, for a year.

Meanwhile, the number of COVID-19 cases continues to rise. The total number of cases globally topped 18 million as of August 3, according to Johns Hopkins University data.

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