Asia report: Markets mixed as China manufacturing PMI rises

Markets in Asia finished in a mixed state on Tuesday, as investors digested fresh manufacturing data out of China, showing slightly faster growth for the sector in May.

In Japan, the Nikkei 225 was down 0.16% at 28,814.34, as the yen weakened 0.01% against the dollar to last trade at JPY 109.59.

Of the major components on the benchmark index, automation specialist Fanuc was down 0.15%, fashion firm Fast Retailing lost 0.3%, and technology conglomerate SoftBank Group was 1.14% weaker.

The broader Topix index gained 0.17% by the end of trading in Tokyo, closing at 1,926.18.

On the mainland, the Shanghai Composite was ahead 0.26% at 3,624.71, and the smaller, technology-heavy Shenzhen Composite advanced 0.41% to 2,429.57.

The unofficial Caixin/Markit manufacturing purchasing managers’ index (PMI) came in at 52 for May, just ahead of expectations for 51.9 predicted by analysts polled by Reuters.

It was also above the 51 reading for May, and remained above the 50-point level that separated expansion from contraction.

Beijing’s official manufacturing PMI was released on Monday, and just missed expectations at 51.0, compared to the 51.1 pencilled in by Reuters polling.

“We had hoped for another boost from US stimulus, but the details reveal that logistical problems got in the way,” said Pantheon Macroeconomics chief Asia economist Freya Beamish.

“The new work subindex implied the strongest increase in five months. But suppliers’ delivery times lengthened, and the input price index jumped to its highest since December 2016.”

Beamish noted that panellists reported material shortages, with price rises impinging on production.

“In turn, the report suggests that output prices increased at the fastest pace since February 2011, in keeping with our call for a strong pick-up in PPI inflation in May.

“Some of these logistical problems will take a while to work through, but it looks like the PMI remains supported by demand, for now.”

South Korea’s Kospi was up 0.56% at 3,221.87, while the Hang Seng Index in Hong Kong jumped 1.08% to 29,468.00.

The blue-chip technology stocks were stronger in Seoul, with Samsung Electronics up 0.12%, and SK Hynix jumped 1.18%.

Oil prices were higher at the end of the Asian day, with Brent crude last up 2.02% at $70.72 per barrel, and West Texas Intermediate ahead 1.79% to $68.10.

In Australia, the S&P/ASX 200 slipped 0.27% to 7,142.60, as the Reserve Bank of Australia sated expectations by standing pat on its policy settings, keeping its cash rate target at a record low 0.1%.

The hefty financials subindex was on the back foot, falling 0.72%, as the country’s big four banks declined.

Australia and New Zealand Banking Group were down 1.39%, Commonwealth Bank of Australia lost 0.26%, National Australia Bank was off 0.82%, and Westpac Banking Corporation closed 0.83% weaker.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was up 1.15% to 12,462.47, with dairy plays mixed amid widespread, damaging flooding in the country’s South Island.

Synlait Milk shot up 8% after its said flooding caused “significant damage” to some of its supplier farms, but confirmed no milk had been lost.

Fonterra Shareholders’ Fund was down 2.5%, meanwhile, after Fonterra said it could not collect product from a number of farms, with a “small number” needing to throw out milk.

The fund is a mechanism allowing investors to participate in the performance of the large Fonterra dairy cooperative.

It was a mixed day for the down under dollars against the greenback, with the Aussie last 0.1% stronger at AUD 1.2918, while the Kiwi weakened 0.08% to NZD 1.3765.