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Asian Markets Mostly Higher After China Manufacturing Data

asiancommentary jan22 31aug20 lt

Asian stock markets are mostly higher on Tuesday despite the mixed cues overnight from Wall Street. Data showing that China's manufacturing sector continued to expand in August and signaled a recovery from the coronavirus pandemic helped boost investor sentiment.

The Caixin/Markit manufacturing Purchasing Managers' Index or PMI for August rose to 53.1 from 52.8 in July. Individually, the sector saw the sharpest increase in output and new orders since 2011.

The Australian market is notably lower as investors turned cautious ahead of the Reserve Bank of Australia's monetary policy decision due later in the day. The RBA is widely expected to keep its benchmark lending rate unchanged at a record low of 0.25 percent.

The benchmark S&P/ASX 200 Index is losing 111.10 points or 1.83 percent to 5,949.40, just off a low of 5,948.40 earlier. The broader All Ordinaries Index is down 110.80 points or 1.77 percent to 6,135.10. Australian stocks closed lower on Monday.

In the banking space, ANZ Banking, National Australia Bank, Commonwealth Bank and Westpac are lower in a range of 2.1 percent to 2.5 percent.

QBE Insurance said its Group CEO Pat Regan is stepping down from the company following an investigation into workplace communications, with QBE's board concluding that Regan exercised poor judgment. QBE's shares are tumbling more than 5 percent.

Oil stocks are also declining after crude oil prices dipped overnight. Santos is losing 3 percent, while Woodside Petroleum and Oil Search are lower by more than 2 percent.

Among the major miners, Rio Tinto, BHP Group and Fortescue Metals are all declining more than 1 percent each.

Gold miners are weak even as gold prices edge higher overnight. Newcrest Mining is losing almost 2 percent and Evolution Mining is lower by almost 1 percent.

In economic news, the latest survey from the Australian Industry Group showed that the manufacturing sector in Australia dropped back into contraction in August, with a Performance of Manufacturing Index score of 49.3. That's down from 53.5 in July and it moves back beneath the boom-or-bust line of 50 that separates expansion from contraction.

The Australian Bureau of Statistics said that the total number of building permits issued in Australia came in at a seasonally adjusted 12.0 percent on month in July, standing at 13,840. On a yearly basis, total permits rose 6.3 percent.

The Japanese market is declining following the mostly negative lead from Wall Street and on a stronger yen. Investors also digested mixed local economic data.

The benchmark Nikkei 225 Index is down 88.37 points or 0.38 percent to 23,051.39, after touching a low of 23,047.77 earlier. Japanese stocks closed notably higher on Monday.

Market heavyweight SoftBank Group is declining almost 1 percent, while Fast Retailing is adding 0.3 percent.

The major exporters are lower on a stronger yen. Canon is losing more than 3 percent, while Panasonic and Mitsubishi Electric are declining more than 1 percent each and Sony is down 0.7 percent.

In the tech space, Tokyo Electron is adding more than 1 percent, while Advantest is unchanged. In the financial sector, Sumitomo Mitsui Financial is up 0.3 percent, while Mitsubishi UFJ Financial is lower by almost 1 percent.

Among automakers, Toyota and Honda Motor are declining almost 1 percent each. In the oil sector, Inpex is lower by more than 1 percent and Japan Petroleum is down 0.5 percent after crude oil prices dipped overnight.

Among the major gainers, Mitsubishi Corp., Mitsui & Co., Sumitomo Corp. and Marubeni Corp. are all higher by more than 2 percent each.

Conversely, Japan Steel Works is losing more than 4 percent, while Nippon Sheet Glass and Nikon Corp. are lower by more than 3 percent each.

In economic news, the latest survey from Jibun bank revealed that the manufacturing sector in Japan continued to contract in August, albeit at a slower pace, with a manufacturing PMI score of 47.2. That's up from 45.2 in July, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction.

The unemployment rate in Japan came in at a seasonally adjusted 2.9 percent in July. That was beneath expectations for 3.0 percent, although it was up from 2.8 percent in June.

In the currency market, the U.S. dollar is trading in the upper 105 yen-range on Tuesday.

Elsewhere in Asia, New Zealand and Singapore are also lower. Meanwhile, Shanghai, South Korea, Taiwan, Indonesia, Malaysia and Hong Kong are higher.

On Wall Street, stocks turned in a mixed performance on Monday as investors continued to weigh the likely impact of the coronavirus pandemic on the economy despite recent comments from Federal Reserve Chairman Jerome Powell that interest rates will likely remain lower for a long time. Worries about U.S.-China tensions and reports showing a surge in new coronavirus cases in several states across America weighed on sentiment. Also, investors were quite reluctant to make significant moves due to a lack of positive triggers.

The Dow ended down 223.82 points or 0.78 percent at 28,430.05 and the S&P 500 settled with a loss of 7.70 points or 0.22 percent at 3,500.31, while the tech laden Nasdaq climbed 79.82 points or 0.68 percent to 11,775.46.

European stocks ended lower on Monday as hopes about fresh stimulus from European Central Bank faded and on weak inflation data from Germany. Germany and France closed notably lower with their benchmarks DAX and CAC 40 sliding 0.67 percent and 1.11 percent, respectively. The U.K. market was closed for a holiday.

Crude oil futures retreated after early gains and settled lower on Monday amid a bit of uncertainty about outlook for energy demand due to continued rise in coronavirus cases. WTI crude for October ended down $0.36 or about 0.8 percent at $42.61 a barrel.

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