Asian shares lower after tech-driven rally on Wall Street
In Asia, stocks were mostly lower on Tuesday as investors awaited the release of Chinese trade data.
A nightly rally on Wall Street, largely driven by tech companies like Apple and Amazon, faded amid concerns over US economic stimulus and the resurgence of coronavirus case numbers in many countries.
Shares fell in Tokyo, Shanghai and Seoul but rose in Sydney. Hong Kong's market was closed due to a typhoon.
Chinese state media reported that in September exports rose 10.2% year over year in yuan or renminbi, while imports rose 4.3%, according to the General Customs Administration. Dollar-based numbers were due later in the day.
Traders kept an eye on the Chinese currency after the central bank removed the requirement for currency dealers to deposit cash, opening the way for more negative speculation about the country's yuan, which could help contain the country's appreciation.
The change went into effect on Monday and removes the 20% deposit requirement imposed on yuan trades in 2018 to discourage speculators.
The rebound in the world's second largest economy has been a rare ray of hope as investors wait to see if the U.S. Congress manages to provide further economic aid to Americans and businesses struggling with the coronavirus pandemic. With the number of cases rising in the United States, Europe, and many other countries, the risk of further disruption to trade, business, and other daily activities increases in some regions.
Tokyo’s Nikkei 225 index fell 0.1% to 23,525.64 while the Shanghai Composite index fell 0.6% to 3,339.76. South Korea's Kospi also gave up 0.6% to 2,388.96. In Southeast Asia, stocks were mostly lower.
The Australian S & P / ASX 200 rose 0.9% to 6,188.50, led by bank stocks. Strong Chinese demand is good news for Australian exporters, although unconfirmed reports that Beijing is slowing or stopping imports of Australian coal raise concerns about the economic impact of political friction between the two countries.
Wall Street extended its gains on Monday from last week's rally, the best market in three months. Investors appeared to have largely shaken off recent signs that Democrats and Republicans are no closer to reaching an agreement on more aid to the economy that continues to be hampered by the pandemic.
The S&P 500 rose 1.6% to 3,534.22, with big tech stocks, including Apple and Microsoft, making the bulk of the gains. Their companies, unlike most companies that would benefit from a solidifying economy, have proven to be virtually impervious to the pandemic. The S&P 500 is now within 1.4% of its all-time high of September 2.
Investors could bet that if the Democrats regain a majority in Congress, some polls suggest that Congress will propose a more generous bailout bill after the November 3rd election. This could offset the potential burden on corporate profits from higher taxes and stricter regulations from a democratically controlled Washington.
"The market is comforting when Democrats take over the White House and Senate, when that means there will be more momentum," said Willie Delwiche, investment strategist at Baird. "But the reality is that it will be a few more months before anything can happen."
The Dow Jones Industrial Average rose 0.9% to 28,837.52. The Nasdaq network, which is heavily weighted with technology stocks, rose by 2.6% to 11,876.26.
Apple rose 6.4%, accounting for a quarter of the S&P 500's surge alone. The iPhone maker was also the index's biggest winner. Amazon rose 4.8%. Both companies have events ahead of them this week. Apple is expected to launch its newest iPhones on Tuesday and Amazon is expected to hold its Prime Day on Tuesday and Wednesday.
Microsoft also closed higher, up 2.6%, Facebook rose 4.3%, and Google's parent company rose 3.6%.
The Russell 2000 index for small cap stocks, which tends to move more with expectations of economic strength than big tech companies, rose 0.7% to 1,649.05.
Since the phasing out of additional unemployment benefits for laid-off workers and other economic support approved by Congress earlier this year, investors have looked for more incentives. While Washington can't deliver the aid anytime soon, some investors are hoping for more help in 2021.
Analysts forecast another quarter with weaker earnings for the upcoming earnings reporting season. According to FactSet, the S&P 500 earnings are expected to decline by 20.5% year over year.
That's not as bad as the 31.6% drop that S&P 500 companies reported for the spring quarter, however. Business has since regained momentum as widespread lockdowns eased across the country.
In the energy business, the US electronic trading reference commodity on the New York Mercantile Exchange rose 2 cents to $ 39.45 a barrel. On Monday it fell $ 1.17 to $ 39.43 a barrel.
Brent crude also rose 2 cents to $ 41.74 a barrel.
The US dollar rose from 105.34 yen to 105.37 Japanese yen. The euro weakened from $ 1.1896 to $ 1.1792.
AP Business Writers Alex Veiga and Stan Choe and Joe McDonald in Beijing contributed to this.
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