Dhaka, Bangladesh
Asian markets mostly up following China data

Asian markets mostly up following China data

Business Desk Asian markets rose Monday as investors cheered data showing a surprise jump in Chinese factory activity, while oil prices bounced from last week’s sharp losses after Iraq said top producers could announce a cut in output this week. But while the week started on a positive note, worries about trade were revived by China’s Global Times newspaper saying Beijing wanted all US tariffs rolled back as part of a mini deal, a move observers said Washington is unlikely to agree to. China said on Saturday that its manufacturing sector expanded in November for the first time in seven months, providing a much-needed boost to investors looking for signs of optimism in the world’s number-two economy. Another survey Monday of smaller firms also showed a better-than-expected pick-up in factory activity. The news comes as Beijing and Washington put the final touches to a partial trade deal, the expected passage of which has helped global markets rally for weeks. “This improvement in the manufacturing (purchasing managers index) is important because we can say with more certainty than at the beginning of the year that China’s macro outlook is indeed stabilising,” Aninda Mitra, senior sovereign analyst at BNY Mellon Investment Management, told Bloomberg News. “A phase one-related pause, which seems to be around the corner, could herald the end of further, scheduled tariff hikes and the rollback of those imposed in September.” Hong Kong rose 0.4 percent and Shanghai edged up 0.1 percent, while Sydney and Seoul each finished 0.2 percent stronger. Tokyo ended up one percent at a 14-month high, Taipei and Mumbai added 0.1 percent and Manila rallied more than one percent with Jakarta also rising. But Singapore, Wellington and Bangkok fell. Tokyo main stock market closed at a 14-month high Monday, boosted by data suggesting China’s economy was improving despite uncertainty over trade talks with Washington. The benchmark Nikkei 225 index added 1.01 percent, or 235.59 points, to 23,529.50, its highest close since October 2018. The broader Topix index rose 0.89 percent, or 15.13 points, to 1,714.49. Investors perked up after China said Saturday that its closely watched Purchasing Managers’ Index (PMI), a key gauge of activity in the country’s factories, rose to 50.2 in November. It came above the 50-point mark that divides boom and bust, and showed an improvement from the 49.3 seen last month. The Tokyo market also cheered the relative strength of the dollar, which stood at 109.64 yen, compared with 109.52 yen late Friday in London. “As (the Nikkei) firmed above the 23,500 mark, solid Asian shares provided support,” buoying the Japanese index, Okasan Online Securities said in a note. “Hong Kong and Shanghai shares gained on (bright) Chinese PMI data,” adding to the general optimism in the market, the brokerage said. Fresh Japanese data indicating increased corporate capital spending during the July-September quarter also pepped up the Tokyo market, SMBC Nikko Securities added. Among major shares, Nintendo soared 2.10 percent to 43,240 yen on reports of strong sales of its products and game titles as the US holiday shopping season kicked off. Sony added 1.36 percent to 6,998 yen. Uniqlo-operator Fast Retailing climbed 1.66 percent to 67,800. Electronics parts maker Murata Manufacturing was up 2.92 percent to 6,529 yen. Construction equipment maker Komatsu rose 0.78 percent to 2,587 yen. Meanwhile small-car specialist Suzuki dropped 2.08 percent to 4,755 while Tokyo Electron, which makes tools to produce semiconductors, fell 0.13 percent to 22,570 yen. The Indian rupee opened on a cautious note and fell 4 paise to 71.78 against the US dollar in early trade on Monday as economic growth concerns and rising crude oil prices kept investors edgy. Forex traders said investors traded cautiously after India’s Q2 GDP growth dipped to over 6-yr low of 4.5 per cent. India’s GDP growth hit an over six-year low of 4.5 per cent in July-September 2019, dragged mainly by deceleration in manufacturing output and subdued farm sector activity, according to official data released on Friday. At the interbank foreign exchange, the rupee opened weak at 71.78 against the US dollar, showing a decline of 4 paise over its previous closing. The Indian rupee on Friday had closed at 71.74 against the US dollar. The rupee, however, pared initial losses and was trading at 71.69 against the US dollar at 0935 hrs. Traders noted that the strengthening of the American dollar vis-a-vis other currencies overseas and sustained foreign fund outflows weighed on the domestic currency. However, positive opening in domestic equities supported the rupee and restricted the fall. Domestic bourses opened on a positive note on Monday with benchmark indices Sensex trading 142.28 points up at 40,936.09 and Nifty higer by 28.10 points at 12,084.15. Meanwhile, foreign institutional investors (FIIs) sold shares worth Rs 1,892.29 crore on Friday, according to provisional exchange data. The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose by 0.04 per cent to 98.31. Crude oil benchmark, Brent Futures, rose 1.26 per cent to USD 61.26 per barrel. The 10-year government bond yield was at 6.46 per cent in morning trade. “Recent manufacturing PMI data does appear to be showing signs of an improvement, not only in the US, but across the rest of the world,” said Michael Hewson at CMC Markets UK. “This would appear to be a welcome respite to what has been an awful year for the manufacturing sector, which has to all intents and purposes been in recession for most, if not all, of this year.” However, analysts raised concerns about an article in the Communist Party-linked Global Times, which tweeted that the government wants levies imposed on China to be removed as the US talks continue. It also said leaders wanted tariffs lined up for December 15 to be taken off the table. But OANDA senior market analyst Jeffrey Halley said: “It is hard to see the US swallowing a very bitter trade pill like that; it would, in effect, remove all of the US’s leverage in the far more difficult comprehensive trade negotiations to come.” “It is now becoming more apparent why the talks have dragged on so long.” There was little immediate reaction on markets to news that China had slapped punitive measures on the US in retaliation for its backing of a pro-democracy movement in Hong Kong, announcing sanctions on NGOs and suspending visits by US warships and aircraft. On oil markets, both main contracts rallied after Iraq said on Sunday that OPEC and other major producers would consider slashing output by 400,000 barrels a day to support prices when they meet in Vienna this week. The gains chipped away at some of the huge losses suffered Friday after reports said Russia was looking to delay any further output reductions until April’s gathering. But AxiTrader’s Stephen Innes said that while the headline figure “might provide some initial price support, it might not be a huge swing factor since Russia at this time seems set against (a cut) in favour of stricter compliance”. In early trade London and Frankfurt each rose 0.2 percent, while Paris gained 0.3 percent.

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