Asian shares steady, China PMIs offer support

File picture: Alex Grimm

File picture: Alex Grimm

Published Dec 2, 2013

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Tokyo - Asian shares and the dollar trod water on Monday, as investors cautiously awaited key US data this week after a decent reading on China manufacturing calmed worries about the health of the world's second-biggest economy.

The tepid performance in the region is seen extending to Europe, with financial spreadbetters tipping Britain's FTSE 100 to open down 0.2 percent, Germany's DAX up 0.1 percent, and France's CAC 40 steady.

“The recent rally has lost some of its momentum but expectations that festive spirits can filter through in to a bumper spending spree are keeping equities well supported,” Jonathan Sudaria, a dealer at London Capital Group, said in a note to clients.

“Although overall spending on 'Black Friday' in the US was a little weaker due to a drop in bricks and mortar sales, this hasn't dented bullish spirits as the surge in online spending is expected to be replicated over here in the slightly more tech savvy European markets as 'Cyber Monday' gets underway,” he added, referring to the Monday after the US Thanksgiving holiday on which online sales have historically surged.

China's factory activity maintained steady growth momentum in November, boosted by resilient new orders, though the pace of

expansion eased slightly from October, the HSBC/Markit Purchasing Managers' Index (PMI) showed.

The final PMI reading came in at 50.8 in November, down from 50.9 in October but improving from a preliminary reading of 50.4. That followed an official survey released over the weekend showing China's factory growth held at an 18-month high last month on firm domestic and foreign demand.

“The data broadly says that things are stabilising in China,” said Thomas Lam, chief economist at DMG & Partners Securities in Singapore.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat, paring earlier losses following the PMI survey and then erasing them in the afternoon.

One regional standout underperformer was Thailand, where the SET index tumbled more than 1 percent as anti-government protesters took to the streets to renew their fight to topple Prime Minister Yingluck Shinawatra, prompting riot police to fire teargas and stun grenades for a second day.

Japan's benchmark Nikkei ended down slightly, after it rallied 9.3 percent last month, spurred by strong earnings and a weakened yen. The index hit its highest closing level in nearly six years on Thursday.

Data released on Monday showed Japanese companies raised spending on factories and equipment in the July-September quarter. However, the slow pace of the increase cast some doubt on whether capital spending is as strong as needed to help sustain economic growth.

Bank of Japan Governor Haruhiko Kuroda said capital expenditure will likely increase as a trend, though he warned in a speech to business leaders on Monday that overseas uncertainties were among key risks for the BOJ to meet its target of 2 percent inflation in about two years.

The BOJ's commitment to ultra-easy monetary policy as it shoots for this goal has kept pressure on the yen, though it held its ground on Monday.

The dollar was steady at 102.43 yen, after it touched a six-month high of 102.61 yen on Friday.

Against the dollar, the euro was slightly higher at $1.3603, while the dollar index, which tracks the US unit against a basket of major rivals, lost about 0.2 percent to 80.560.

The euro added about 0.1 percent against its Japanese counterpart to 139.32 yen, moving back toward Friday's five-year high of 139.70 yen.

 

PAYROLLS IN FOCUS

US data later in the week remains a key focus, with the Federal Reserve poised to reduce its stimulus as soon as it deems the economy is strong enough.

Nonfarm payrolls for November is scheduled for release on Friday, with economists expecting an increase of 185,000 jobs last month, down from 204,000 in October, according to a Reuters survey of economists.

In commodities trading, gold was down about 0.5 percent at $1,245.69 an ounce, undermined by concern that signs of a stronger US economy could compel the Fed to reduce its stimulus.

Gold has lost around a quarter of its value so far this year, on track to post its first annual loss in 13 years.

Copper shed about 0.3 percent to $7,030.25 a tonne as expectations for a swelling market surplus next year offset any cheer from the China PMI survey.

Copper lost 2.7 percent in November.

Brent crude oil gained about 0.4 percent to $110.13 a barrel, lifted by the China PMI, after it shed more than $1 on Friday.

US crude was about 0.5 percent higher at $93.21 as traders weighed supply outages in Libya against US. - Reuters

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