Chinese stocks recover, Asian stocks pause

TOKYO / HONG KONG (Reuters) – The Chinese equity market continued its positive run on Tuesday, in response to pressure from the continental government for a stronger market, while the rest of the region remained cautious on stocks.

The largest MSCI index of Asia Pacific stocks outside of Japan fell low during the local session and fell 0.2%, after briefly moving into positive territory.

The negative performance on Tuesday came after the index rose 7%, which brought it to a high of 4-1 / 2 months in the past five trading sessions.

The Japanese Nikkei fell 0.7% while US equity futures fell 0.25% in Asia after strong gains on Monday in the wake of soaring Chinese stocks.

In China, the leading CSI300 index of Shanghai and the stocks of Shenzhen, which had gained more than 13% in the last five sessions, increased again by 1.5%, led by the rise of the sector technological.

Ample Finance Group director Alex Wong said that although the sentiment in the Chinese market was positive, investors remained cautious about the risk of it being short-lived.

“The mood is still pretty strong … and I think people will be ready to hold on while we absorb some of the positive news in the world,” Wong told Reuters in Hong Kong.

“The upward momentum is strong, but people are aware of the prospect of a reversal of the situation. If this happens, we could see a strong correction. ”

Hong Kong’s Hang Seng index fell 0.86% despite city general manager Carrie Lam said on Tuesday that market reaction had been positive for China’s recently introduced national security law .

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Graphic: ChiNext advances here

Analysts said the Chinese government’s jawboning through a state-sponsored newspaper on the importance of “fostering a healthy bull market” published on Monday had spurred the buying spree of Chinese stocks.

The current rally in China echoes the past, especially in 2007 and the buying spree that followed the crash of 2015, which was largely driven by Chinese retail investors.

“The Shades of John F. Kennedy’s Inaugural Speech” Don’t Ask What Your Country Can Do For You “here and as close as possible to a Chinese government” put “like everything the Fed has done to this day vis-à-vis the US stock (and credit) markets, “said Ray Attrill, head of FX strategy at NAB, in a research note.

A sharp rebound in service sector activity in the United States in June, almost returning to its pre-pandemic level, also helped to whet investors’ risk appetite.

However, new cases of coronavirus have jumped in several states, forcing some restaurants and bars to close again in a setback to the nascent recovery, while controlling gains in risky assets.

In the currency market, the Chinese yuan rose, reaching its highest levels in almost four months. The renminbi rose 0.1% to 7.0115 per dollar.

“The yuan is supported by the mood of risk in the Chinese equity market despite lingering uncertainties over US-China relations and the expected slow pace of recovery,” said Ei Kaku, chief strategist at Nomura Securities.

“We also did not see any significant capital flows that would stimulate the yuan,” she said.

The other major currencies changed little, the yen standing at 107.41 for the dollar and the unchanged euro at $ 1.1312.

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The Reserve Bank of Australia kept the official cash rate at 0.25% in July, which is a record level, but the central bank showed an optimistic tone in a statement accompanying the decision.

The Australian dollar remained relatively stable at $ 0.6968 after the decision.

Gold remained stable near an eight-year high, changing hands to $ 1,784.24 an ounce.

Oil prices were mixed in line with some of the Asian equity markets.

Brent crude lost 0.51% to $ 42.88 a barrel, while American crude West Texas Intermediate fell 0.59% to $ 40.39.

Source: Reuters

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