Asian shares steady; regional PMI data dampens mood
TOKYO, Feb 1 — Asian shares were on the defensive today after a series of surveys on factory output signalled a tough outlook for the region’s manufacturers, though Japanese equities were a notable exception, logging their longest winning run in 54 years on a weaker yen.
European markets are likely to inch higher, with financial spreadbetters predicting London’s FTSE 100, Paris’s CAC-40 and Frankfurt’s DAX would open up as much as 0.2 per cent.
A 0.3 per cent rise in US stock futures suggested a firmer open on Wall Street.
Several surveys today suggested Asia’s manufacturers face a challenging business climate in the coming months, with China’s vast factory sector managing only a shallow rebound at the start of 2013 as feeble foreign demand dragged on sales.
Two separate surveys of China’s purchasing managers’ index (PMI) showed that factory output in the world’s second-biggest economy rose in January, but the pace of the revival in activity was uneven.
China’s official PMI logged a reading of 50.4, easing from December’s 50.6 and below forecasts for a nine-month high of 50.9. A separate private sector PMI released by HSBC, however, rose to a two-year high of 52.3.
“It seems new orders for exports have declined even when new orders overall rose, suggesting that infrastructure spending and other investment to spur domestic demand is needed to keep (China’s) economy growing,” said Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory.
“But it’s not going to change the view about the Chinese economy recovering. The official data was just neither good nor bad.”
Other PMI releases showed manufacturing growth slowed or stalled in India and South Korea, while factories in Indonesia said business shrank in January from December for the first time in eight months.
The MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed by mid-afternoon after swinging up and down 0.2 per cent during the day. It was set for a weekly gain of 0.6 per cent and 2.6 per cent so far this year.
A 0.9 per cent jump to a 21-month high in resources-reliant Australian shares helped the pan-Asian index out of the negative territory, but weak Hong Kong shares capped the index.
The commodity-linked Australian dollar fell 0.3 per cent to session lows around US$1.0382.
“Australia is a high-yielding country and there are a lot of foreign funds coming here and that is supporting the market,” said Macquarie Equities division director Lucinda Chan.
Investors’ focus now turns to the US nonfarm payrolls report, which will likely show a rise of 160,000 jobs and the jobless rate staying steady at 7.8 per cent.
Manufacturing purchasing managers’ indexes from the United States and the euro zone, as well as the Institute for Supply Management’s manufacturing index, are also due later in the session.
The euro added 0.3 per cent to US$1.3623 to the dollar, after earlier reaching a fresh 14-month high of US$1.3634. The common currency’s strength has pushed the dollar index to a one-month low of 79.078.
“The euro revival looks set to continue for some time, as investors return to euro zone bond markets, content with the combination of the European Central Bank backstop for sovereign risk and low inflation danger due to lack of economic growth. The dollar bloc looks to be a key loser in the portfolio reallocation back into EUR,” Westpac bank said in a note.
Japan’s benchmark Nikkei stock average closed at a fresh 33-month high, bolstered by the yen’s decline to new lows, and logged its 12th straight week of gains, the longest run of weekly gains since 1959. The benchmark index rose 0.5 per cent.
The dollar advanced further against the yen, up 0.6 per cent to 92.25 yen, having earlier hit its highest since June 2010 of 92.27. The euro extended gains, soaring 1 per cent to its highest since April 2010 of 125.75.
The yen also plunged to its lowest since August 2008 against both the Australian dollar, at 95.84 yen, and against the New Zealand dollar at 77.58 yen.
“The yen selling is seen as a safe bet because Prime Minister Shinzo Abe has not faltered on his election pledge about beating deflation, highlighting the government’s resolve,” said Kimihiko Tomita, head of forex at State Street in Tokyo.
Oil and copper prices firmed and the euro extended gains against the dollar, reflecting a recent trend of improving sentiment across asset classes, underpinned by easing stress in the euro zone and a generally positive global economic outlook.
“Chinese data should get stronger into the second quarter. Global indicators are improving, so it makes sense to a certain extent that speculators are taking another look at copper,” said analyst Bonnie Liu of Macquarie in Singapore.
London copper added 0.6 per cent to US$8,213.50 a tonne.
US crude futures inched up 0.1 per cent to US$97.56 a barrel while Brent hit its highest in over three months at US$115.91. — Reuters