Asia report: Stocks close in the red despite China PMI rebound

Asian shares finished the Tuesday session lower after a selloff on Wall Street and ahead of a several central bank rate decisions this week, while data showing a rebound in Chinese economic activity for the first time in four months failed to boost sentiment.

The US Federal Reserve, Bank of England and European Central Bank are all expected to lift interest rates as they battle to stymie inflation.

On regional markets, Hong Kong’s Hang Seng index finished 1% lower, having been down almost 2% earlier in the session.

Japan’s Nikkei 225 fell 0.39%, China’s Shanghai composite was 0.42% lower, Australia’s ASX 200 down 0.07% and Singapore’s Straits Times was 0.40% lower.

South Korean shares were hit by a sharp fall in Samsung, which reported a plunge in fourth-quarter operating profits as electronics and chips sales tanked.

“Demand for smartphones remained sluggish with the mass market contracting sharply due to continued inflation and geopolitical instability,” Samsung said.

India’s BSE Sensex was the only outperformer, rising 0.13%, despite another selloff in some of tycoon Gautam Adani's troubled firms in the wake of a report from short seller Hindenburg accusing the Adani group of holding high debt levels and using tax havens,

Subscriptions to Adani’s $2.5bn share sale surged on Tuesday to hit 70%, despite group stocks being under pressure after a rout that has wiped $66bn from its market value.

"The January rally has hit a wall and probably won't have a chance of returning until we get beyond Wednesday's Fed press conference and Apple's results after the Thursday close," said OANDA analyst Edward Moya.

Traders shrugged at data showing China's factory activity expanded in January after four months of contraction as the economy reopened from years of strict zero-Covid curbs.

While the news was welcome, National Bureau of Statistics statistician Zhao Qinghe warned there were still "many manufacturing and services firms that reported insufficient market demand in January, which is still the biggest problem faced by firms".

"The economy's recovery foundation needs to be further solidified."

However, there was still some upbeat guidance from the International Monetary Fund, which sees the global economy picking up this year, citing strong consumption and investment, and China's emergence from Covid restrictions.

In its World Economic Outlook report it said "adverse risks have moderated" since October's forecast.

"The year ahead will still be challenging... but it could well represent a turning point with growth bottoming out and inflation declining," said IMF chief economist Pierre-Olivier Gourinchas.

Reporting by Frank Prenesti for Sharecast.com