Most Asian markets edged up on Friday following an across-the-board sell-off the previous day, but disappointing data has jolted optimism over the economic recovery that has helped drive gains for the past few months.
Traders have for weeks been able to look past fresh spikes in infections around the globe to focus on the trillions of US dollars spent on government support and the easing of lockdowns.
However, with containment measures being reintroduced in parts of the world that had appeared in control of the outbreak — including Hong Kong, Japan and Australia — confidence has taken a hit.
Photo: AP
Data out of China on Thursday showed that while the economy grew more than expected, the crucial reading on retail sales was below forecasts, indicating consumers — key to reigniting growth — were still reluctant to go out and spend.
A later report showed that US retail sales continued to rise last month, but at a slower pace than in May, and new claims for US unemployment benefits last week were little changed from the previous week at 1.3 million, a historically high level.
Economists fear that the figure might rise again as major states, including California and Texas, impose fresh lockdown measures.
“Data released over the last 24 hours seriously questions the speed of any post-COVID-19 economic recovery,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “The numbers illustrate the economic challenges posed by secondary infection outbreaks.”
Markets around the world tumbled on Thursday, although they staged a mild recovery ahead of the weekend.
In Hong Kong, the Hang Seng added 0.47 percent to 25,089.17, but dropped 2.48 percent from a week earlier.
The Shanghai Composite Index inched up 0.13 percent to 3,214.13 after collapsing 4.5 percent following a rally of about 15 percent since the start of July. It lost 5 percent for the week.
India’s S&P BSE SENSEX rose 1.5 percent, despite news that India had become the third country to record more than 1 million cases of COVID-19. It gained 1.16 percent for the week.
Australia’s S&P/ASX 200 index increased 0.38 percent to 6,033.6, climbing 1.93 percent from a week earlier, while South Korea’s KOSPI climbed 0.8 percent to 2,201.19, up 2.37 percent weekly.
The TAIEX increased 0.2 percent to 12,181.56, gaining 0.89 percent for the week.
Bangkok and Wellington also edged up, but there were losses in Manila, Singapore, Tokyo and Jakarta.
“Try as one may, it’s challenging to look through the makeup of China’s economic recovery, which offers a roadmap to the rest of the world that is not especially bullish for one that is wholeheartedly predicated on consumer-driven recovery,” AxiCorp Financial Services Pty chief market strategist Stephen Innes.
“Forget about a V, this is going to be a lengthy S-L-O-G shaped recovery,” he added.
Additional reporting by staff writer
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