Asia’s major stock indexes had a mixed day on Tuesday with poor factory data out of China dampening the mood, reviving questions over the world’s second-largest economy.
China stocks led the losers, snapping a five-day winning streak after data showed manufacturing activity unexpectedly contracted in October. But in Japan shares advanced after the Bank of Japan (BOJ) added more flexibility to its yield curve control but kept the stimulative policy in place.
Higher long-term yields and a steeper yield curve improve the outlook for returns from lending and investing and the Nikkei share average was up 0.53%, or 161.89 points, to close at 30,858.85. The broader Topix was ahead 1.01%, or 22.48 points, to 2,253.72.
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Financial stocks were the big winners, with the Tokyo Stock Exchange’s insurer sub-index climbing 2.65% to lead gains among the 33 industry sectors. The banking sub-index gained 2.21%.
Tech stocks remained a drag on the Nikkei, with chip-related shares tracking a decline in US peers overnight and Panasonic sliding on disappointing earnings, slumping 8.91% after cutting the profit outlook at its EV battery unit.
In China, the official purchasing managers’ index (PMI) fell to 49.5 in October from 50.2, dipping back below the 50-point level separating contraction from expansion, and missing a forecast of 50.2, data from the National Bureau of Statistics showed.
“The unexpected decline of manufacturing PMI shows the recovery in China is a bumpy road as domestic demand is still quite weak,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, adding it reinforces the case for stronger fiscal policy support.
The blue-chip CSI 300 Index dropped 0.31% and the Shanghai Composite Index edged down 0.09%, or 2.78 points, to 3,018.77. The Shenzhen Composite Index on China’s second exchange fell 0.53%, or 10.03 points, to 1,874.51.
In Hong Kong, tech giants were down 2.2% and mainland developers slumped 3%. Shares in China Vanke, one of the top Chinese developers, slumped nearly 3% after Vanke reported weak results for the third quarter.
The Hang Seng Index dropped 1.69%, or 293.88 points, to 17,112.48, while the Hang Seng China Enterprises Index declined 1.65%.
Elsewhere across the region, in earlier trade, there were also losses in Seoul, Taipei, Mumbai, Bangkok and Jakarta but Sydney, Singapore, Wellington and Manila rose.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.86% lower, hovering close to the one-year low it touched last week. The index is down 4% in October and on course for third straight month in the red.
US Economy Resilient
Futures indicated stocks in Europe were set for a subdued open, with the Eurostoxx 50 futures down 0.15%, German DAX futures down 0.05% and FTSE futures 0.08% lower ahead of inflation data for the euro zone.
Investor focus this week will mainly be on the major central bank meetings, with the US Federal Reserve and Bank of England due to meet.
Later on Tuesday, the Federal Open Markets Committee will convene for a two-day monetary policy meeting, which is expected to culminate in a decision to let the Fed funds target rate stand at 5.25%-5.50%.
A slew of recent data showed the US economy remains resilient and comments from Fed Chair Jerome Powell will be scrutinised to gauge how long interest rates are likely to stay elevated.
The Treasury Department said on Monday it expects to borrow $76 billion less this quarter than anticipated in the third quarter on expectations of higher revenue receipts.
The yield on 10-year Treasury notes was up 0.9 basis points at 4.886%. The dollar index, which measures US currency against six rivals, rose 0.16%.
In commodities, oil prices rose in Asian trade after a drop of more than 3% in the previous session, as worries over supply stirred by conflict in the Middle East blunted a dismal showing of China data. US crude rose 0.68% to $82.87 per barrel and Brent was at $88.10, up 0.74% on the day.
Spot gold eased 0.2% to $1,991.39 after slipping below the $2,000/ounce milestone in the previous session.
Key figures
Tokyo – Nikkei 225 > UP 0.53% at 30,858.85 (close)
Hong Kong – Hang Seng Index < DOWN 1.69% at 17,112.48 (close)
Shanghai – Composite < DOWN 0.09% at 3,018.77 (close)
London – FTSE 100 > UP 0.44% at 7,359.44 (0934 GMT)
New York – Dow > UP 1.58% at 32,928.96 (Monday close)
- Reuters with additional editing by Sean O’Meara
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