Asia report: Most markets rise, China data disappoints

by | Aug 31, 2021

Most equity markets closed positively in Asia on Tuesday, although stocks in China were mixed as investors digested some disappointing services data.
In Japan, the Nikkei 225 was up 1.08% at 28,089.54, as the yen strengthened 0.03% against the dollar to last trade at JPY 109.89.

It was a positive day for the benchmark’s major components, with robotics specialist Fanuc up 1.85%, Uniqlo owner Fast Retailing adding 2.1%, and technology giant SoftBank Group gaining 0.47%.

The broader Topix index was ahead 0.54% by the end of trading in Tokyo, settling at 1,960.70.

On the mainland, the Shanghai Composite was 0.45% firmer at 3,543.94, while the smaller, technology-centric Shenzhen Composite was off 0.46% at 2,429.86.

China’s services sector contracted for the first time since the height of the country’s Covid-19 crisis, official figures showed earlier in the session.

The non-manufacturing purchasing managers’ index (PMI) fell to 47.5 in August from 53.3 a month earlier – well short of the 52 reading expected by analysts.

The National Bureau of Statistics’ survey of services dipped below 50, which marks the difference between growth and contraction, for the first time since 2020.

Manufacturing just stayed in growth territory, meanwhile, with a reading of 50.1.

Economists blamed shutdowns to contain the spread of the Delta variant of Covid-19, flooding in some regions and uncertainty created by regulatory clampdowns.

The composite PMI dipped to 48.9 as factory orders dropped, raising concerns about the prospects for the world’s second-biggest economy.

“The non-manufacturing survey was a true stinker,” said Kyle Rodda, a market analyst at IG.

“Though obviously it doesn’t tell the whole story for China’s economy, the PMIs were the weakest since the Covid-19 collapse of February 2020, and reveal the impact of last month’s Delta outbreak on the country amid what’s a clear trend of weakening growth.”

South Korea’s Kospi advanced 1.75% to 3,199.27, while the Hang Seng Index in Hong Kong was ahead 1.33% at 25,878.99.

Major Chinese technology plays were mixed in the special administrative region amid ongoing fears of regulatory clampdowns from Beijing.

Netease was down 2.07% by the end of trading in Hong Kong, while Tencent reversed earlier losses to close up 3.31%.

The blue-chip technology stocks were stronger in Seoul, with Samsung Electronics up 2.82% and SK Hynix rising 2.9%.

“Asian markets were in less buoyant mood [on Tuesday] as increased regulation and fears of slowing economic growth in China continued to weigh,” said Interactive Investor head of markets Richard Hunter.

“Factory activity expanded at a slower rate in August, with higher raw material prices given supply chain disruptions and certain lockdown restrictions in the region impacting, as well as a weaker services activity reading.”

Oil prices were lower as the region went to bed, with Brent crude last down 0.82% at $72.81 per barrel, and West Texas Intermediate losing 1.06% to $68.48.

In Australia, the S&P/ASX 200 was 0.41% higher at 7,534.90, while across the Tasman Sea, New Zealand’s S&P/NZX 50 managed gains of 0.29% to 13,218.83.

It was a tale of two Covid-19 outbreaks in the southern economies, with the Australian state of New South Wales recording yet another daily record number of cases, while most of New Zealand prepared for a small easing of restrictions on Tuesday night as its fresh cluster of cases appeared to be mostly contained to the largest city, Auckland.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.47% at AUD 1.3641, and the Kiwi advancing 0.86% to NZD 1.4166.

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