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James Hyerczyk
Chinese Stocks, Asian Shares

The major Asia Pacific stock indexes traded steady to mixed on Monday, but mainland Chinese stocks jumped as China’s central bank maintained its benchmark lending rate for the third straight month, much to the delight of investors. China shares were also supported after regulators lifted equity investment cap restrictions for insurers, giving them the greenlight to buy stocks more aggressively.

Early in the session, Asian shares were pressured by weak commodities such as crude oil and copper, as a spike in global coronavirus cases cast a pall over markets awaiting efforts from the Euro Zone and United States to stitch together fiscal stimulus plans to battle the pandemic.

On Monday, Japan’s Nikkei 225 Index settled at 22717.48, up 21.06 or +0.09%. Hong Kong’s Hang Seng Index is trading 24996.42, down 92.75 or -0.37 and South Korea’s KOSPI Index finished at 2198.20, down 2.99 or -0.14%.

In China, the Shanghai Index settled at 3314.15, up 100.02 or +3.11% and Australia’s S&P/ASX 200 Index closed at 6001.60, down 32.00 or -0.53%.

Chinese Markets Supported by Two Strategic Moves

Over the weekend, China’s regulators raised the limit on how much insurers can invest in equity assets to 45%, according to Reuters, in an effort to bring more long-term funds into the market.

On Monday, China kept both its one-year and five-year loan prime rate unchanged, according to Reuters, as its economy continued to recover after reopening following the coronavirus crisis. Last week, official data showed that its economy grew 3.2% in the second quarter from a year earlier, better than the 2.5% expected by analysts, according to Reuters.

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Japan’s Volatile Nikkei 225 Index Inches Higher

Japan’s benchmark Nikkei, which had started firm, faltered by late morning, only to turnaround into the close. The earlier weakness was attributed to data that showed the country’s exports suffered a double-digit decline for the fourth month in a row in June.

Japan’s exports dived 26.2% in June from a year earlier, the report showed, according to Reuters. Economists were looking for a 24.9% decline. Imports fell 14.4%, compared with an estimate of a 16.8% decline, according to Reuters.

The auto sector took a big hit. With the news, Nissan dived 3.12%, Mitsubishi Motor tumbled 2.12% and Suzuki declined 3.79%.

Hong Kong Shares Tumble as Government Tightens Restrictions

Hong Kong tightened COVID-19 restrictions on Sunday, closing amusement parks, gyms and 10 other types of venues for another seven days, while a requirement for restaurants to only provide takeaway after 6pm was extended. Face masks will be mandatory in indoor public areas, and non-essential civil servants were told to work from home this week.

Australian Shares Fall on Renewed Virus Recovery Concerns

Australian shares closed lower Monday, dragged by the energy sector on weaker oil prices, and as authorities warned that the coronavirus outbreak in the country’s second-most populous state could take weeks to control.

Australia’s chief medical officer said the outbreak in Victoria State could take weeks to subside despite a lockdown and orders to wear masks.

Prospects of a prolonged recovery from the outbreak hit travel stocks hard, with Victoria and New South Wales being busy commercial air traffic hubs.

The energy index fell 2.6 percent to its lowest close since May 18 as oil prices declined on fears that a recovery in fuel demand could be derailed by a rise in the pace of coronavirus infections globally.

For a look at all of today’s economic events, check out our economic calendar.
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