Asia: Stocks down despite improved Chinese and Japanese PMIs

Asian stocks closed on a mixed note on Wednesday as positive data failed to lift the region's equity margins.

Australia’s benchmark ASX index fell 0.93% despite the release of strong gross domestic product (GDP) figures.

According to the Australian Bureau of Statistics, the nation's economy expanded at a 2.3% year-on-year pace in the first quarter, beating expectations for growth of 2.1%.

That was down from the rate of growth of 2.5% seen at that same time last year. Quarter-on-quarter GDP rose by 0.9% after an increase of 0.5% in the previous quarter, beating forecasts of 0.7%.

The strong US dollar continued to weigh on commodity prices, following the release of a raft of better than expected economic data Stateside.

Elsewhere, the Shanghai composite closed down 0.01% after two days of gains following reports that the People's Bank of China (PBOC) may cut rates on loans to banks.

Those losses also came despite data showing a thirteenth consecutive month of expansion in Chinese business activity, with the HSBC services sector purchasing managers' index (PMI) rising to 51.5 in May from 52.9.

Markit Economics noted that the rate of activity growth weakened for a second consecutive month, with HSBC’s own composite index falling to 51.2 from 51.3 in April.

Annabel Fiddes, economist at Markit said: “Overall, growth momentum appears relatively weak, weighed down by an on-going deterioration in manufacturing operating conditions, therefore further stimulus measures may be required to keep up with an annual GDP growth target of 7%.”

On a brighter note, Hong Kong's benchmark Hang Seng index advanced 0.69% in the face of a decline in the city’s PMI to 47.6 in May from 48.6 in April. Markit said the data suggested that Hong Kong’s economy "may struggle to recover any growth momentum in the near-term, as companies continued to shed staff and reduced their input buying in response to weaker demand conditions”.

A stronger yen versus the US dollar weighed on the Nikkei 225, which sagged 0.34%.

Japan’s services PMI improved to 51.5 from 51.3 in April, which Markit economists said signalled a general improvement in business conditions at Japanese services firms.

However, business sentiment weakened to a 14-month low driven by the higher sales tax implement last year still hurting optimism and reduced trade volumes with China.

In corporate news, shares in Japanese multinational Sony Corp lost 1.37%.