Asian stocks mixed, Tokyo gains after Wall Street soars

Asian shares were mixed on Monday after stocks rallied to records on Wall Street, with the Dow Jones Industrial Average closing above the 35,000 level for the first time. Tokyo advanced after a four-day weekend as the Olympic Games began, a year late. Benchmarks fell in Hong Kong and Shanghai but rose in Sydney. Preliminary factory and service activity surveys in Japan showed a slowdown linked to recent tightening of pandemic precautions due to surging Coronavirus cases. The flash purchasing managers index for the services sector fell to 46.5 in July from 48 in June, on a scale of 1-100 where 50 marks the break between expansion and contraction.

Manufacturing remained in expansion, but fell to 50.5 from 50.7 in June, said the au Jibun Bank survey. It said new export orders declined, possibly reflecting supply bottlenecks. Output fell at the fastest pace in six months. "Short-term disruption to activity is likely to continue until the latest wave of Covid-19 infections passes and restrictions enacted under the State of emergency laws are lifted," Usamah Bhatti, economist at IHS Markit, said in a report.

Nonetheless, Tokyo's Nikkei 225, tracking Wall Street's strong finish on Friday, gained 1.2 per cent to 27,864.79. In Australia, the S&P/ASX 200 edged less than 0.1 per cent higher, to 7,397.60, while the Kospi in Seoul declined 0.4 per cent to 3,240.46. Hong Kong's Hang Seng sank 2.9 per cent to 26,527.06 after Chinese regulators said they were further tightening restrictions on tech companies.

The Shanghai Composite index dropped 2.2 per cent to 3,473.13. On Friday, the Dow, S&P 500 and Nasdaq all finished with gains of better than one per cent for the week. They each returned to records after brushing aside the sharp downturn that trimmed 1.6 per cent off the S&P 500 on July 19. But the market rebounded as big companies reported better profits than expected and as investors once again saw any dip in stocks as merely a chance to buy low. The S&P 500 index climbed one per cent to 4,411.79. The Dow rose 0.7 per cent to 35,061.55 and the Nasdaq composite gained one per cent to 14,836.99.