Asia report: Stocks drop as uncertainty strikes investors
After a strong showing last week, Asian markets fell on Monday following weak Chinese data and with investor confidence wavering over the week's US midterm election.
Following its best week since mid-2016, Japan’s Nikkei 225 dropped by 1.55% to 21,898.99, while the yen was down 0.02% against the greenback at JPY113.22.
Big fallers included car manufacturing giant Subaru, which fell about 5%, Uniqlo parent Fast Retailing, which dropped by 4.8% in Monday trading and gaming outfit Nintendo, which lost 2.7% after it announced worse-than-expected earnings last week.
Auto manufacturer Toyota was down 1.0% ahead of the release of its first-half results on Tuesday.
A services PMI survey showed a rebound to 52.4 in October from 50.2 in September, with new business rising at the fastest pace in over five years. "A recovery was to be expected, as activity in Q3 was depressed by a series of natural disasters, so firms have some catching-up to do. Nevertheless, the jump was larger than we anticipated," said economist Freya Beamish at Pantheon Macroeconomics.
China’s Shanghai Composite fell by 0.41% to 2,665.43 and the tech-heavy Shenzhen Composite edged 0.01% lower to 1,351.00 as President Xi Xinping denounced the “America first” policies of his Washington counterpart in a speech at a Shanghai trade fair.
“All countries should strive to improve their business environment and solve their own problems. They shouldn’t always whitewash themselves and blame others, or act like a flashlight that only exposes others, but not themselves,” said Xi.
The Chinese leader also pledged to boost domestic consumption, strengthen intellectual property protection and advance trade talks with Europe, Japan and South Korea, but investors seemed unimpressed.
Confirming the slowdown reported in last week's official data, the Caixin services PMI fell to 50.8 in October from 53.1 in September, well below the consensus 52.8.
"The consensus looked high, given the downtrend. We weren’t expecting this extent of drop, but the data are almost absurdly volatile," said Beamish. "We could see a snap back in November, but the downtrend is reflective of reality. New business stagnated for the first time since the financial crisis, with reports of subdued demand."
Hong Kong’s Hang Seng index was the biggest faller in the region, dipping by 2.08% to 25,934.39 as gaming and social media giant Tencent dropped by 3.7%, automaker Geely fell 2.8% and smartphone-component maker AAC shed 7.4%.
The South Korean Kospi was down 0.91% at 2,076.92 following its exceptional 3.5% surge on Friday, with electronics giant and index bellweather Samsung down 0.8%.
Car manufacturing giant Hyundai was also down, dropping 5.5% after sales in China slumped and its market share in the country having dropped from over 10% at the start of the decade to 4%. The company, which is the sixth largest car manufacturer in the world, posted a 68% drop in third quarter profit last month.
The Australian S&P/ASX 200 ended a six-day winning streak as it fell by 0.5% to 5,818.14, though major Australian banks rallied after Westpac releasing a poor earnings report.
Healthcare stocks dragged the index down however, with CSL down 2.4% and hearing aid manufacturer Cochlear dropping 3.8% after incurring a AU$268m fine for patent infringement.
New Zealand’s S&P/NZ50 dropped by 0.64% to 8,778.78 as the country’s biggest fuel retailer Z Energy dropped for a third successive trading session, falling 5.1%.
Volumes were low among major stocks as investors remain cautious in the face of the upcoming US midterm election and ongoing trade tensions between Washington and Beijing, analysts said.
The Australian dollar was up fractionally against the US dollar at AU$1.30, while New Zealand’s dollar crept up 0.09% against the greenback to NZ$1.50.