Asian Stocks Down, Taking a Rest from Record-Breaking Month

Asian Stocks Down, Taking a Rest from Record-Breaking Month

© Reuters.  © Reuters.

By Gina Lee – Asia Pacific stocks were mostly down on Monday morning, taking a breather from a record-breaking month as November draws to a close.

“Markets are overbought and at risk of a short-term pause. However, we are now in a seasonally strong time of year and investors are yet to fully discount the potential for a very strong recovery next year in growth and profits as stimulus combines with vaccines,” AMP (OTC:AMLTF) Capital head of investment strategy Shane Oliver told Reuters.

Positive Chinese manufacturing data and hopes for a COVID-19 vaccine-driven economic recovery, as well as the possibility of more stimulus from central banks, helped calm some COVID-19 worries in the near-term.

China’s Shanghai Composite rose 1.13% by 11:04 PM ET (3:04 AM GMT) while the Shenzhen Component was down 0.41%. Data released earlier in the day showed that the manufacturing Purchasing Managers Index (PMI) grew 52.1% in November, higher than the 51.5% growth in forecasts prepared by and October’s 51.4% reading. The non-manufacturing PMI was also better than expected, growing 56.4% in November against the forecast 56% and October’s 56.2% figure.

U.S.-China tensions are again on the rise, as President Donald Trump’s administration will reportedly add Semiconductor Manufacturing International Corp and China National Offshore Oil Corp to a list of blacklisted Chinese military companies.

Hong Kong’s Hang Seng Index edged down 0.18%. Schools across the city got an early Christmas break after the government ordered them closed. Hong Kong saw 115 daily COVID-19 cases recorded on Sunday.

Japan’s Nikkei 225 inched up 0.01%, with industrial production growing 3.8% month-on-month in October according to data released earlier in the day. The figure was slightly lower than the 3.9% growth seen in September, however.

South Korea’s KOSPI was down 0.29% and in Australia, the ASX 200 fell 0.71%. The Reserve Bank of Australia will convene for its policy meeting on Tuesday.

Meanwhile, global shares were up 13% as November draws to a close. Recent positive news on the development of a COVID-19 vaccine boosted hopes of a global economic recovery and boosted investor sentiment, despite the production and delivery challenges that remain. Goldman Sachs (NYSE:GS) also expects a large part of the population in major developed economies to be inoculated by mid-2021 and drive a “sharp pickup” in global growth.

“As long as the trajectory in economic data is one for improvement, then there is room for the cyclical areas to outperform … those cyclical, value areas are likely to be beneficiaries of the environment we are going into post vaccine and more normalization,” AMP Capital Investors Ltd. multi-asset fund manager Nader Naeimi told Bloomberg.

U.S. Federal Reserve Chairman Jerome Powell is due to testify before Congress on Tuesday and Wednesday. Labor market data from the U.S., including the Markit composite PMI, is also due later in the week.

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