Asian Shares Mixed After Pelosi’s Taiwan Visit

Asian stocks turned in a mixed performance on Wednesday after a private survey showed China’s services sector grew at a faster clip in July compared to the previous month as a result of easing COVID-19 curbs.

A cautious undertone prevailed after U.S. House Speaker Nancy Pelosi’s visit to Taiwan triggered a strong reaction from China.

Taiwan struck a defiant tone as a furious China geared up for military exercises dangerously close to the island’s shores in retaliation for the visit. China views Taiwan as a breakaway province.

The dollar edged higher and U.S. Treasury yields rose after a trio of Fed policymakers talked up the potential for further, aggressive interest rate hikes.

Oil prices were flat to slightly lower in Asian trading ahead of a meeting of OPEC+ producers that may not lead to a further boost in crude supply.

China’s Shanghai Composite Index closed 0.7 percent lower at 3,163.67 after a choppy session. Hong Kong’s Hang Seng Index rose 0.4 percent to 19,767.09.

Japanese shares rebounded after having hit a two-week low in the previous session. The Nikkei 225 Index climbed 0.5 percent to 27,741.90, while the broader Topix ended 0.3 percent higher at 1,930.77.

Air-conditioning maker Daikin Industries jumped 4 percent after lifting its outlook. Similarly, West Japan Railway rallied 3.5 percent and Sanrio surged 12.9 percent after reporting positive earnings.

A measure of Japan’s services sector activity hit the lowest level since March in July, suggesting that the economy may struggle to stage a convincing recovery from the COVID- pandemic.

Seoul stocks rose notably, led by gains by automakers and battery makers. The Kospi advanced 0.9 percent to 2,461.45. LG Energy Solution topped the gainers list to close 4.8 percent higher at 437,000 won.

Australia stocks declined as the latest readings on retail sales and service sector activity proved to be a mixed bag. The benchmark S&P ASX 200 Index dropped 0.3 percent to 6,975.90, while the broader All Ordinaries Index closed 0.2 percent lower at 7,202.90.

Across the Tasman Sea, New Zealand’s benchmark S&P NZX-50 Index rallied 1.5 percent to 11,705.03 as disappointing jobs data stoked speculation the Reserve Bank may not raise interest rates as aggressively in the future.

U.S. stocks ended lower for a second day running on Tuesday, as investors weighed the risks of worsening relations between the U.S. and China as well as hawkish comments from regional Fed presidents about the central bank’s path forward.

Job vacancies fell in June to their lowest level in nine months, raising economic slowdown fears. The Dow fell 1.2 percent, the S&P 500 shed 0.7 percent and the tech-heavy Nasdaq Composite slipped 0.2 percent.

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