Asia: Stocks mixed as China and Japan service activity improves

Asian stocks were mixed after data showed Chinese and Japanese services activity improved in November.

The HSBC purchasing managers’ index (PMI) for Chinese services rose to 53 from 52.9 a month earlier. A level above 50 signals expansion.

Separate data from the National Bureau of Statistics and Federation of Logistics and Purchasing revealed non-manufacturing PMI rose to 53.9 in November from 53.8 in October.

However, the composite output index, which combines services and manufacturing activity, fell to 51.1 from 51.7 in October, the weakest marginal rate of growth in six months.

Hongbin Qu, chief economist at HSBC said: “We expect the People’s Bank of China’s recent rate cuts will help stabilise demand in the near term.

“However, downside pressures on the economy still persist and warrant further monetary and fiscal easing measures in the coming months.”

Shanghai’s composite rose 0.58% while Hong Kong’s Hang Seng index fell 0.95%.

Japan’s Nikkei 225 gained 0.32% as the yen weakened against the dollar to support exports. Markit’s services PMI for Japan rose to 51.2 in November from 48.7 the previous month.

Australian gross domestic product (GDP) growth was unveiled at 2.7%, below expectations of 3.1%, knocking the Australian dollar to a four-year low against the greenback.

"The poor data was confounded by gross domestic income actually contracting by 0.4% in the quarter meaning that that despite a positive GDP reading Australians were actually worse off due to the prices of exports fell alarmingly," explained Alpari market analyst James Hughes.

"This pushes the Australian economy into income recession meaning that there is now real pressure on the central bank to potentially cut interest rates in the coming months."

Company-wise, Bank of China declined in Shanghai after gains spurred by policy easing lifted valuations to a 22-month high.

Otsuka Holdings Co. slumped after the drugmaker said it would buy Avanir Pharmaceuticals for about $3.54bn.