Asian stocks, oil prices retreat on weak Chinese manufacturing data

A businessman walks past a share prices board in Tokyo. (Photo: AFP/Yoshikazu Tsuno)

TOKYO: Asian stocks fell on Monday (Nov 2) and oil prices dropped as investors weighed fresh data showing China's slowdown could be deeper than previously thought, while the dollar extended losses against the yen and most emerging currencies.

Tokyo led Asian stocks lower after data showed China's manufacturing activity slowed in October for the third straight month, fuelling worries about its economy which is a crucial driver of global growth.

China's Purchasing Managers' Index (PMI), tracking activity in the factory and workshop sector, was unchanged from the previous month at 49.8, the state statistics office said Sunday.

News that banking giant HSBC saw its pre-tax profit rise 32 per cent year-on-year in the third quarter failed to lift sentiment in Hong Kong and Shanghai substantially.

After three straight days of gains last week, oil prices also declined on the manufacturing data.

"While you get the ebbs and flows from this monthly data relative to expectations, the overall outlook is one of timid and sluggish activity in the Chinese economy," said Chris Green, a strategist at First NZ Capital Ltd.

"We're not expecting a protracted downturn but it will require further policy response from the PBoC (People's Bank of China) to stabilise the growth profile in China. The bigger thing this week is the US jobs data, which could reinforce the prospects of a December move by the Fed."

Investors also turned to profit-taking following October's global stocks surge, after markets recovered from their worst quarter in four years during July-September.

Japanese investors weighed Friday's Bank of Japan decision to cut its growth forecasts and push its inflation timetable back for the world's number three economy, while holding the trigger on unleashing monetary stimulus.

Tokyo finished 2.10 per cent lower, Sydney shed 1.41 per cent and Wellington edged down 0.04 per cent by the close. Seoul closed up 0.28 per cent despite a stronger won and a drop in South Korean exports.

Hong Kong ended 1.19 per cent lower and Shanghai closed down 1.70 per cent.

On Wall Street Friday, the Dow fell 0.52 per cent, the S&P 500 lost 0.48 per cent and the Nasdaq dropped 0.40 per cent.

DOLLAR RETREATS

The dollar remained under selling pressure against the yen and emerging currencies in the afternoon Monday, after stagnant US economic indicators bolstered the argument against a December rate rise.

The US government said Friday consumer spending rose only by 0.1 per cent in September, less than expected and the slowest rate since January.

"Tokyo has taken over the dollar-selling sentiment from New York," said Minori Uchida, head of Tokyo global markets research at Bank of Tokyo-Mitsubishi UFJ.

"It is difficult to buy the dollar now as the recent economic figures are not strong enough to justify a rate hike," Uchida told AFP.

The dollar bought ¥120.47 , from ¥120.67 on Friday in New York.

The euro was at US$1.1036 and ¥132.94 from US$1.1003 and ¥132.77 in US trade.

While the US Federal Reserve said earlier this year it expected to tighten monetary policy before 2016, the summer's turmoil on global markets and a slowdown in the world economy have forced policymakers to stay their hand.

Many economists are tipping a US interest rate lift-off early in the new year, boosting emerging-market currencies.

These had been hammered this year on talk of a 2015 move as investors transferred their cash to the United States in search of better and safer returns.

In other Asian currency trade Monday, Taiwan's dollar gained 0.42 per cent against the greenback, while the Singapore dollar advanced 0.06 per cent, the Malaysian ringgit added 0.15 per cent, the Indonesian rupiah rose 0.22 per cent, the South Korean won traded up 0.32 per cent and the Thai baht was 0.12 per cent higher.