Asian markets rise as traders brush off early upset at China data
Markets rose in Asia on Tuesday, tracking another record Wall Street close, as investors overcame early selling pressure sparked by data indicating China's economic recovery had been slowed down by an outbreak of the fast-spreading Delta Covid variant.
The positive energy stoked by a pledge from Federal Reserve boss Jerome Powell to be cautious in withdrawing the bank's vast financial support appeared to have dissipated at the open, replaced by fresh concerns over Beijing's crackdown on private enterprises and the ever-present spectre of the coronavirus.
The day got off to a weak start after China released figures showing activity in the services industry contracted last month for the first time since February 2020.
Authorities imposed strict travel restrictions on swathes of the country this month to contain its worst outbreak of Covid since the initial pandemic with dozens of cities affected and tens of millions of people subject to containment measures.
The moves saw flights cancelled and tourist spots closed while events were called off in a bid to nip the flare-up in the bud.
The "data again reflected the outsized and asymmetric shock on the service sector from Covid-related restrictions", Liu Peiqian, at Natwest Markets, said.
And while new case figures have been brought under control again, Liu warned any such spike in future will again likely hit the services sector.
Several other countries -- including Australia and New Zealand -- have been forced to impose tough measures to battle a surge in infections while also struggling with their vaccine rollouts.
Analysts said US Treasury yields remained subdued -- indicating higher demand for the safe-haven assets -- owing to lingering concerns over the impact of Delta on the recovery.
"The bond market is getting a little nervous about the economic outlook," Priya Misra, at TD Securities, told Bloomberg Television.
But she added: "I actually think the economy is fundamentally strong. By year end, if the economy holds up, which we forecast it will, that's when we expect rates -- especially in the long end -- to start to edge higher.
"Tokyo and Seoul rose more than one percent, while Shanghai, Sydney, Wellington, Taipei, Manila, Mumbai and Bangkok were also well up.
Hong Kong also reversed heavy morning selling after China announced rules allowing under-18s to only play their computer games for three hours a week, saying it wanted to curb what it called an addiction.
Companies are prohibited from offering gaming services outside the stipulated hours, although the statement did not make it clear how rule-breakers would be punished.
The announcement is the latest blow for the tech industry and gaming from Beijing, which has vowed to rein in firms it considers to have become too powerful.Still, observers said that many firms had reported earnings in the second quarter that had not been drastically affected by the new rules.
Gaming giant Tencent, which has been battered for months by Beijing's clampdown, lost more than three percent in early business but ended up more than three percent.
London edged down in the morning, though Paris and Frankfurt both rose.Investors are now gearing up for the release of US employment data Friday, which could have a bearing on when the Fed begins tightening monetary policy.
The reading comes after around 1.8 million new jobs were created through July and August.
"Another stellar print would firm up expectations of a near-term taper announcement as early as the September (policy) meeting, while a weaker print would see such an announcement pushed back to November or December," said National Australia Bank's Tapas Strickland.
Oil prices dipped as investors assess the damage to refineries after Hurricane Ida slammed into the Gulf of Mexico, while they are also awaiting the monthly meeting of OPEC and other key producers on Wednesday.