Monday, November 4, 2013
DJ: Asian Stocks Lower, Losing Early Gains On China Data
Asian stocks edged lower on Monday, losing earlier gains prompted by an upbeat reading in China's service sector, with Thailand falling due to continued political tensions.
Much of the region started the day higher on signs of growth in China's services sector, as the official Non-Manufacturing Purchasing Managers' Index rose to 56.3 in October, according to data released over the weekend. The measure was much higher than the 50 mark that separates expansion from contraction and was the highest reading in 14 months.
The effect of the data was short-lived, as the region dropped lower ahead of a number of major events that could affect markets. The big event for Asia will be the upcoming key meeting of China's Communist Party, where the new leadership is expected to discuss the reform agenda. In terms of global news, investors are anticipating the U.S. labor report - out on Friday.
Hong Kong's Hang Seng Index was down 0.1% and the Shanghai Composite fell less than 0.1%
Australia's S&P ASX 200 dropped 0.2% and South Korea's Kospi lost 0.5%. In Singapore, the Straits Times Index rose 0.1%.
The impact of the Chinese data was more noticeable in Australia's currency on Monday, which knocked higher early in the session and received a further boost after local retail sales rose much more than expected in September. The so-called Aussie was at $0.9477, compared to $0.9439 late Friday in New York.
The next event for the currency will be the Reserve Bank of Australia's meeting on Tuesday. A dovish speech given last week by Glenn Stevens, the central bank's governor, raised expectations that interest rates could be cut again.
The biggest move in Asia occurred in Thailand, where the SET fell 1.6%, after a weekend of escalating political tension in the country over an amnesty bill. It is seen by critics as an attempt to allow Thaksin Shinawatra, the country's former leader and brother of the current prime minister, to return to Thailand from self-exile.
In Japan, where stock markets stopped trading Monday for a public holiday, the yen was little moved at Y98.75 to the dollar.
Earnings season continued in Australia as Westpac Banking Corporation fell 1.2% after the country's second-largest bank by market value reported a fiscal year profit that beat expectations, as well as a special dividend, though this was offset by a pre-prevision operating profit that undershot forecasts.
Also in Sydney, Coca-Cola Amatil dropped 4.8% after warning that its fiscal year earnings before interest and tax would be down between 5% and 7%.
The main earnings announcement for the region on Monday will be HSBC Holdings. The largest constituent on Hong Kong's Hang Seng Index is scheduled to announce its latest earnings after the market closes. The lender's stock was up 0.1%.