The major Asia-Pacific stock indexes finished mixed but mostly lower on Friday, led by a steep decline in Japan. The sell-off was primarily fueled by a record contraction in U.S. gross domestic product in the second quarter. This was followed by another rise in weekly U.S. initial claims, the inability of Congress to pass another stimulus bill and mixed earnings results. Meanwhile, China’s factory activity beat expectations.
On Friday, Japan’s Nikkei 225 Index settled at 21710.00, down 629.23 or -2.82%. Hong Kong’s Hang Seng Index finished at 24595.35, down 115.24 or -0.47% and South Korea’s KOSPI Index closed at 2249.37, down 17.64 or -0.78%.
China’s Shanghai Index settled at 3310.01, up 23.18 or +0.71% and Australia’s S&P/ASX 200 Index finished at 5927.80, down 123.30 or -2.04%.
US GDP Plunges During Second Quarter
Data released Thursday by the U.S. government showed GDP dropping 32.9% in the second quarter – the worst drop ever, with the closest previously coming in mid-1921. Still, the data print was not as bad as feared, with economists polled by Dow Jones have expected a 34.7% decline.
US Weekly Jobless Claims Rise
The number of Americans who filed new claims for unemployment benefits last week totaled 1.434 million, the Labor Department reported Thursday, roughly in line with expectations, as the coronavirus pandemic continues to ravage the U.S. economy.
Continuing claims – which are composed of those receiving unemployment benefits for at least two straight weeks – rose by 867,000 to 17.018 million for the week-ending July 18.
Congress Fails to Agree on Next Coronavirus Stimuli Deal
Republicans and Democrats have made little progress toward a coronavirus relief deal as economic data show an economy still reeling from the coronavirus pandemic. Congressional leaders are blaming one another for the expiration as coronavirus cases continue to increase around the country. Meanwhile, an enhanced federal unemployment benefit is expiring even as initial jobless claims increased for two consecutive weeks.
China’s Factory Activity Beats Expectations in July
China’s factory activity expanded in July for the fifth month in a row and at a faster pace, beating analyst expectations despite disruptions from floods and a resurgence in coronavirus cases around the world.
The official manufacturing Purchasing Manager’s Index (PMI) rose to 51.1 in July from June’s 50.9, official data showed on Friday, marking the highest reading since March. Analysts had expected it to slow to 50.7.
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This article was originally posted on FX Empire
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