Asia report: Markets mostly lower as China misses on manufacturing PMI

Markets in Asia were mostly lower as they closed on Friday, as investors were faced with disappointment after some fresh manufacturing data from China.

In Japan, the Nikkei 225 was down 0.83% at 28,812.63, and the yen strengthened 0.07% against the dollar to last trade at JPY 108.85.

Of the major components on the benchmark index, automation specialist Fanuc was down 2.91%, fashion firm Fast Retailing was off 0.02%, and technology conglomerate SoftBank Group slipped 0.06%.

The broader Topix index was 0.57% weaker by the end of trading in Tokyo, closing at 1,898.24.

On the mainland, the Shanghai Composite was off 0.81% at 3,446.86, and the smaller, technology-heavy Shenzhen Composite was 0.29% lower at 2.298.93.

Fresh data out of Beijing showed factory activity expanding in China in April, albeit at a slower pace than market participants were hoping for.

The official manufacturing purchasing managers’ index (PMI) came in at 51.1 for the month, falling from 51.9 in March but still remaining above the 50-point level that separates expansion from contraction.

Analysts polled by Reuters had pencilled in an April reading of 51.7, however.

Pantheon Macroeconomics chief Asia economist Freya Beamish said a stronger result was anticipated as manufacturers digested the news of the United States stimulus package.

“But these data are consistent with the data on PM2.5 concentrations, as well as Korean 20-day trade numbers.

“It seems that China met any demand boost from US stimulus with inventory - the output index dropped, with the new export orders index rising, while the stock of finished goods index fell.”

The unofficial Caixin/Markit manufacturing PMI rose to 51.9 in April from 50.6 in March, above the consensus of 50.9, meanwhile.

“It was due a bounce, and isn’t affected by seasonality issues in these two months.

“At the same time, the firms in the sample are smaller, more export-oriented, and more likely to benefit from the US stimulus.”

Beamish said the PMI data pushed back the peak in Pantheon’s PPI inflation forecast by several months.

“Price rises remain strong, and if that continues then year-on-year inflation should breach 9% in the next couple of months.

“Today’s data suggest PPI inflation jumped to 7.0% in April, from March’s 4.4%.”

South Korea’s Kospi lost 0.83% to 3,147.86, while the Hang Seng Index in Hong Kong dropped 1.97% to 28,724.88.

The blue-chip technology stocks were on the back foot in Seoul, with Samsung Electronics down 0.24% and SK Hynix off 1.54%.

Oil prices were lower as the region entered the weekend, with Brent crude last down 0.48% at $68.23 per barrel, and West Texas Intermediate losing 0.75% to $64.52.

In Australia, the S&P/ASX 200 was down 0.8% at 7,025.80, as the hefty financials subindex closed down 0.67%.

The country’s big four banks were in the red, with Australia and New Zealand Banking Group down 0.69%, Commonwealth Bank of Australia off 1.07%, National Australia Bank losing 0.41%, and Westpac Banking Corporation 0.71% weaker.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was the region's odd one out, managing gains of 0.13% to 12,731.13.

Wellington’s bourse was led higher by cinema technology company Vista Group, which was ahead 3.4%, on the back of some positive economic data from the United States overnight, where many of its customers are based.

The down under dollars were in a mixed state against the greenback, with the Aussie last 0.05% stronger at AUD 1.2872, while the Kiwi weakened 0.07% to NZD 1.3814.