Asia: China leads gains as disappointing manufacturing data fuels hopes of fresh stimulus
Most Asian indices ended higher on Thursday, with China’s Shanghai Composite leading the gains, closing up 1.1% following the release of manufacturing figures for May.
Hang Seng
23,099.78
10:21 07/10/24
Nikkei 225
39,332.74
09:44 07/10/24
Although the data pointed to a contraction, the ‘bad news is good news’ mantra held firm and stocks were buoyant as hopes grew that it would prompt the Chinese central bank to embark on fresh stimulus measures.
Figures showed that China’s manufacturing sector shrunk more than expected in May, with the flash HSBC/Markit index rising to 49.1 from a 12-month low of 48.9, but still below expectations for a reading of 49.3 and below the 50 mark that separates contraction from growth.
In Japan, the Nikkei 225 ended up 0.1% at 20,220.78 having earlier hit a fresh 15-year high after the release of better-than-expected growth figures, as investors booked profits ahead of the two-day Bank of Japan policy meeting that began Thursday.
The Markit/JMMA flash manufacturing purchasing managers' index rose to a seasonally adjusted 50.9 in May from 49.9 in April.
“We regard the PMI moving above the 50 line in May after slowing for three straight months as confirming a pickup in manufacturing activity. We think this is consistent with our view that the slowdown in growth will be short-lived,” Nomura said.
As well as the data, investors in Asia mulled over minutes from the Federal Reserve’s latest meeting, which failed to shed any more light on the timing of a central bank interest-rate hike.
Overall, Fed officials saw a rate hike in June as unlikely. “Most Fed policy members thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, although they generally did not rule out this possibility,” the minutes read.
Hong Kong’s Hang Seng index fell 0.2%, while Australia’s S&P/ASX 200 ended up 0.9%.