Asian stock markets experienced mixed dynamics on Monday. The main stock indicators did not only change sluggishly but also moved in different directions. This mainly concerns Japan's Nikkei 225 index which began to fall after the release of statistics on the country's GDP. In addition to this is the escalating conflict between the US and China which puts increasing concerns amongst market participants.
Japan's Nikkei 225 is down 0.7% in the morning. According to statistics, the Japanese economy has been hit hard in the second quarter of this year. The level of GDP contracted by 7.8% at once, which was only down by 0.6% during the first quarter. Thus, for three quarters in a row, there has been a decline, which was the last record-breaking one. The reason for this collapse is the impact of the coronavirus pandemic, which has not yet been fully dealt with.
Meanwhile, experts warned Japan about a possible deep fall, but even their forecasts were slightly better than real data. Its GDP was expected to fall by at least 7.6% in the last quarter. If you compare the last figure with the one recorded a year ago, you can see a colossal difference: over the year, the Japanese economy collapsed by 27.8%. The main drop occurred precisely in the second quarter of 2020. Of course, such data could not please investors in any way, which was reflected in the stock indicator.
China's Shanghai Composite Index rose significantly by 2.4%. The Hong Kong Hang Seng Index also followed the positive trend and climbed 1.2%.
Australia's S & P / ASX 200, on the contrary, showed negative dynamics and has declined 0.8% so far.
Stock markets in South Korea did not open today because of the holidays in the country.
Multidirectional dynamics were also observed on the US stock exchanges on Monday due to a new portion of statistics and the expectation of a final decision on the fiscal stimulus program in the country.
The level of retail sales in the second month of the summer in the US showed more modest growth, which was expected by analysts and market participants. This began to push the latter to believe that the country's economy is still in an extremely unstable and weak position. As it became known, retail sales rose only 1.2% compared to the previous month. At the same time, preliminary data were much higher: analysts spoke of an increase of 1.9%, and some even of a 2% increase, which never happened.
However, there are some positive aspects as well. The level of labor productivity in the second quarter of this year increased immediately by 7.3%, which was the maximum growth over the past eleven years. The average labor cost from April to June also rose by about 12.2%. Of course, analysts expected an increase, but their data was much more modest. Thus, in preliminary forecasts, labor productivity growth was indicated by no more than 1.5%, and the cost of labor did not exceed 6.2%.
The positive changes also affected the industrial production sector. Its volume in the US in July rose by 3% compared with the indicator that was recorded earlier. It is noteworthy that this time the preliminary forecasts coincided with the real data. Compared to last year's level of industrial production, its current figure has decreased by 8.2%.
The consumer confidence index in the US in the last month of the summer rose by 72.8 points, while earlier it was equal to 72.5 points. The experts were not ready for such an increase: according to their data, this indicator should have remained around 72 points.
The main attention of market participants was still associated with the adoption of a decision on the ratification of a new package of financial incentives in the country. Democrats and Republicans continue to come up with disagreements which caused an unfavorable effect on the mood of the stock exchanges. Clearly, the problem would remain for some time after the publication of data from the labor market, which turned out to be better than expected. This made the authorities ponder whether a stimulus package is needed at all. However, the situation with consumer confidence, which is rapidly falling, so far indicates the need for such measures.
Another extremely unpleasant factor for investors was the news about the indefinite postponement of negotiation on the trade agreement between Washington and Beijing. This can only mean that the conflict between the countries is aggravating and the situation is still very far from being normal.
The Dow Jones Industrial Average closed Friday's trading with an increase of 0.12% or 34.3 points, which allowed it to move to the level of 27,931.02 points.
The Standard & Poor's 500 index, on the other hand, was negative declining 0.02% or 0.58 points. The current level of the indicator is 3,372.85 points.
The Nasdaq Composite Index fell 0.2% or 26.33 points, which sent it to the level of 13,019.09 points.
Stock markets in Europe are inactive this morning which also went on multidirectional dynamics.
The general index of large enterprises in the Stoxx Europe 600 region went up 0.19% which allowed it to move to the level of 368.77 points.
The UK FTSE 100 Index is up by 0.34%. Germany's DAX jumped 0.22%. France's CAC 40 index rose 0.23%. The Italian FTSE MIB index, on the contrary, went down by 0.13%. Spain's IBEX 35 followed suit and sank 0.62%.
Most of the pressure on European markets comes from the conflict between the U and China. However, the epidemiological situation in the world, which is still very tense, is being monitored no less than this.