The Bloomberg reported that the U.S. is considering a range of economic sanctions on Chinese officials and companies over the situation in Hong Kong.
Chinese shares ended modestly lower after official data showed the country’s industrial profits declined at a much slower pace in April.
Industrial profits dropped 4.3 percent on a yearly basis, following a sharp 34.9 percent decrease in March. During January to April period, industrial profits decreased 27.4 percent from the same period last year compared to 36.7 percent fall in the first three months of 2020.
The benchmark Shanghai Composite index dropped 9.74 points, or 0.34 percent, to 2,836.80, while Hong Kong’s Hang Seng index fell 0.36 percent to 23,301.36.
Thousands of protesters shouted pro-democracy slogans and insulted at police in Hong Kong ahead of a debate over a bill that would criminalize disrespect of China’s national anthem.
Beijing has reportedly expanded the scope of the draft national security legislation to include banning not just behavior or acts that endanger national security, but also activities.
Japanese shares hit a three-month high as speculative short-covering by macro hedge funds boosted financials. The Nikkei average climbed 148.06 points, or 0.70 percent, to 21,419.23, its highest closing level since February 28. The broader Topix index added 0.96 percent to finish at 1,549.47, its highest level since February 27.
Banks Mitsubishi UFJ Financial, Sumitomo Mitsui Financial and Mizuho Financial rallied 2-4 percent. Dai-ichi Life Holdings surged 6.3 percent and Nomura Holdings advanced 5.7 percent. Tech stocks fell, with Advantest down 2.7 percent and Tokyo Electron losing 3.6 percent.
Australian markets recovered from an early slide to end little changed with a negative bias.
National Australia Bank, the country’s third-largest lender, soared 7.8 percent after saying it would increase the size of its share purchase plan offer by A$750 million ($498.60 million). The other three big banks surged 5-9 percent.
Miners paced the decliners, with BHP, Rio Tinto and Fortescue Metals Group losing 2-5 percent.
Gold miners succumbed to heavy selling pressure as gold hovered near a two-week low in the wake of improved risk appetite on hopes for economic recovery. Evolution Mining slumped 8.5 percent, Newcrest lost 7.2 percent and Northern Star Resources plunged nearly 11 percent.
Shares of vitamins producer Blackmores entered a trading halt ahead of a capital raising.
On the economic front, the total value of construction work done in Australia was down a seasonally adjusted 1.0 percent sequentially in the first quarter of 2020, data showed. That exceeded expectations for a decline of 1.5 percent, following the 3.0 percent drop in the three months prior.
Seoul stocks fluctuated before ending on a flat note after U.S. President Donald Trump said the country was working on a strong response to China’s planned national security legislation for Hong Kong, without giving further details.
New Zealand shares advanced after the Reserve Bank of New Zealand said that banks in the country have strong buffers of capital and liquidity to weather the significant economic impact caused by the coronavirus pandemic. The benchmark NZX-50 index ended up 134.45 points, or 1.23 percent, at 11,049.19, with dual-listed banks leading the surge. ANZ surged 11.9 percent and Westpac Banking Corp jumped 10.9 percent.
U.S. stocks rallied overnight as all 50 states partially eased lockdown restrictions and JPMorgan CEO Jamie Dimon made some optimistic comments about the economic recovery and the health of his bank.
The Dow Jones Industrial Average climbed 2.2 percent and the S&P 500 gained 1.2 percent, while the tech-heavy Nasdaq Composite edged up 0.2 percent.
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