Asia report: Markets mixed as China data beats forecasts

Markets in Asia finished in a mixed state on Monday, after data showed China’s manufacturing sector as expanding beyond expectations in July.

In Japan, the Nikkei 225 was up 2.24% at 22,195.38, as the yen strengthened 0.08% against the dollar to last trade at JPY 105.78.

Of the major components on the benchmark index, automation specialist Fanuc was up 3.93%, fashion firm Fast Retailing added 2.89%, and technology conglomerate SoftBank Group added 5.33%.

The broader Topix index was ahead 1.03% by the end of trading in Tokyo, settling at 1,522.64.

On the mainland, the Shanghai Composite was ahead 1.75% at 3,367.97, and the smaller, technology-heavy Shenzhen Composite gained 2.6% to 2,315.44.

Fresh unofficial data out of China showed an expansion in China’s manufacturing sector in July, with the Caixin/Markit manufacturing purchasing managers’ index (PMI) coming in at 52.8 for the month.

That compared to Reuters-polled expectations for 51.3, and indicated a month of expansion given it was above 50 points.

South Korea’s Kospi eked out 0.074% to finish at 2,251.04, while the Hang Seng Index in Hong Kong lost 0.56% to 24,458.13.

Anglo-Asian banking giant HSBC was down 4.43% by the end of trading in the special administrative region, after it reported pre-tax profits for the first half that were 65% lower year-on-year.

Both of the blue-chip technology stocks were weaker in Seoul, with Samsung Electronics down 1.9% and chipmaker SK Hynix losing 1.21%.

Geopolitical tensions remained at the top of the agenda, after US Secretary of State Mike Pompeo said overnight that Donald Trump would announce new measures against Chinese software companies viewed as a threat “in the coming days”.

That came after the president told the press on Friday that he would ban Chinese-owned social video app TikTok in the United States.

On Sunday, Washington-based technology giant Microsoft confirmed it had been in talks to buy TikTok’s US operations from the Beijing-headquartered ByteDance.

“Geopolitical noise from the US increased a notch over the weekend,” said Oanda senior Asia Pacific market analyst Jeffrey Halley.

He noted that Trump’s threats to ban TikTok and other Chinese apps highlighted the challenge Sino firms faced when emerging from their domestic market, when, by law, China's government could order an entity to hand over all of its data in theory.

“ByteDance being the latest aspirational Chinese company to run afoul of the Americans and others on this significant point.

“Given that the great firewall of China blocks anyone who is anyone from doing business on the mainland - another asymmetric point of tension - the fallout from China's government should be relatively modest.”

Halley said even China would struggle to spin their way out of that one with “such a blatantly uneven” playing field.

Oil prices were lower at the end of the Asian day, with Brent crude last down 0.8% at $43.17 per barrel, and West Texas Intermediate off 1.17% at $39.80.

In Australia, the S&P/ASX 200 was off 0.029% at 5,926.10, as rural and retail conglomerate Wesfarmers lost 1.4%.

The company, which operates the country’s major department store chains Kmart and Target as well as hardware giant Bunnings Warehouse, is set to be hit by a complete ban on all retail in Melbourne opening for the next six weeks, amid a hastening Covid-19 outbreak in the Victorian state capital.

Supermarkets and liquor stores will be allowed to remain open, which saw grocery majors Coles Group and Woolworths Group rise 1.6% and 0.93% in Sydney, respectively.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.52% weaker at 11,666.09, with the Wellington listings of the major Australasian banks in the red.

Australia and New Zealand Banking Group was down 4.8% and Westpac Banking Corporation was off 3.9%, while New Zealand-focussed bank Heartland Group was 0.8% weaker.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.5% at AUD 1.4069, and the Kiwi retreating 0.03% to NZD 1.5088.