SYDNEY- Asian shares and oil prices bounced on Monday as a wave of bargain hunting swept beaten-down markets and China reported no new locally acquired COVID-19 cases for the first time since July.
A raft of “flash” manufacturing surveys for August out on Monday will offer an early indication of how global growth is faring in the face of the Delta variant, with analysts expecting some slippage especially in Asia.
Japan’s factory activity growth slowed in August, while that of the services sector shrank at the fastest pace since May last year, highlighting the toll from COVID-19 measures on the economy.
“Following a strong V-shaped recovery, there are many signs of slower growth,” says BofA’s chief investment strategist Michael Hartnett. “The US yield curve is at a one-year low, emerging markets are negative YTD and both copper and oil are down double digits from recent highs.”
He expects negative returns for stocks and credit in the rest of this year and suggests investors own defensive quality.
Concerns over China’s economy have only intensified in recent weeks, while Beijing’s regulatory crackdown on the tech sector delivered a double blow to markets.
More than $560 billion was wiped from Hong Kong and mainland China exchanges last week as funds fretted on which sectors regulators might target next.
Beijing is considering pressing data-rich companies to hand over management and supervision of their data to third-party firms if they want US stock listings, sources told Reuters.
The impact has been evident in MSCI’s broadest index of Asia-Pacific shares outside Japan which sank 4.8 percent last week. The sheer speed and scale of the fall left it oversold, helping it rally 1.4 percent on Monday.
Japan’s Nikkei also bounced 1.8 percent, but that follows a 3.4 percent slide last week to its lowest since December. Chinese blue chips firmed 1.2 percent from a three-week low.
