Asia: Markets mostly higher as China marks holiday

[HONG KONG] A sense of calm returned to Asian trading Thursday after weeks of China-fuelled volatility as a public holiday on the mainland allowed investors to focus on upbeat US data, helping push riskier assets higher.

A healthy run-up on Wall Street provided a perfect start for regional dealers ahead of the release of a crucial jobs report out of Washington on Friday.

However, the more upbeat mood came against a backdrop of a warning from the International Monetary Fund (IMF) that the recent turmoil from the China crisis was having a broader impact on the global economy.

Tokyo rose 1.4 per cent by lunch while Seoul added 0.46 per cent. There were also gains for Singapore and Taipei.

Shanghai and Hong Kong were closed to mark World War II Victory Day commemorations in China.

"A major source of market disruption is sidelined as markets in China are now closed for the week," Michael McCarthy, chief market strategist in Sydney at CMC Markets, told Bloomberg News. "Asia-Pacific investors are anticipating relief today." However, lingering concerns about Australia's economy kept Sydney in the red, with the ASX 200 down 0.80 per cent.

World indices have seen wild swings on growing fears about China's economy - the world's second biggest and a key driver of global expansion - as its leaders struggle to manage a slowdown in growth.

The latest ructions came on Tuesday when Beijing said the country's vast manufacturing sector had contracted in August.

International markets were shaken amid fresh questions over the government's ability to contain the crisis and transition the economy from one that is investment-driven to one reliant on consumer spending.

But buying sentiment was supported Thursday by advances on Wall Street, with the Dow up 1.82 per cent, the S&P 500 gaining 1.83 per cent and the Nasdaq 2.46 per cent higher.

US dealers were lifted by the Fed's Beige Book survey of the economy, which showed growth was modest to moderate while respondents were optimistic about the coming months.

Also Wednesday, a survey from payroll firm ADP showed the US private sector saw a 190,000 jump in new jobs in August. That came two days before the government's own figures, which are tipped to see a healthy rise.

Eyes are on the US central bank as its policymakers are scheduled to gather in two weeks for a meeting where they may decide to increase the key interest rates.

The buoyant mood also provided support for the dollar against the yen, which is considered a safer option in times of turmoil.

The greenback stood at 120.58 yen in early Tokyo trade, up slightly from 120.32 in New York Wednesday.

But while the US economy looks to be getting back on track, the IMF highlighted the fragility of the global economy as China struggles.

In a report for Group of 20 finance ministers meeting in Turkey this week the Fund said the upheaval in China, as well as factors like capital flow reversals, posed increased risk to economic growth around the world.

"China's transition to a lower growth, while broadly in line with forecasts, appears to have larger-than-previously-envisaged cross-border repercussions, reflected in weakening commodity prices and stock prices," it added.

However, it did not lower its outlook for world growth this year. Earlier this week IMF boss Christine Lagarde said global expansion would be "likely weaker" than forecast in 2015 owing to a bigger-than-expected slowdown across most economies.

AFP