Asia stocks retreat after China services data sours mood
Wednesday, 6 August 2014 00:01
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Reuters: Asian stocks slipped on Tuesday after a survey showed China’s services sector growth fell to a record low, souring the positive mood from upbeat US earnings and relief over Portugal’s rescue of its largest bank.
Spreadbetters saw Europe faring better, with Capital Spreads expecting Britain’s FTSE to open 0.1% higher, Germany’s DAX 0.5%, and France’s CAC 0.4%.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4%, turning negative after the China services purchasing managers’ index (PMI) compiled by HSBC/Markit fell to 50.0 in July from a 15-month high of 53.1 in June.
It was the lowest reading since November 2005 when the data collection began, indicating a recovery in the broader economy is still fragile and may need further government support.
“The weakness in the headline number likely reflects the impact of the ongoing property slowdown in many cities as property related activity, such as agencies and residential services, see less business,” said HSBC’s China Chief economist Qu Hongbin.
Tokyo’s Nikkei fell 0.5% and mainland Chinese shares slipped 0.5% .CSI300 from a seven-month high hit just before the data.
US stocks had rallied on Monday, lifted by Portugal’s decision to rescue Banco Espirito Santo and earnings from Warren Buffett’s Berkshire Hathaway.
The Australian dollar received a small boost, paring earlier losses after the Reserve Bank of Australia stopped short of actively jawboning the currency lower.
As widely expected, Australia’s central bank kept its cash rate at a record low of 2.5% to mark a full year without a change, and the inaction looks likely to stretch for some time yet as the economy copes with a cooling mining boom.
The Aussie nudged up 0.1% to an intraday high of $ 0.9344 after dropping to as low as $ 0.9316 AUD=D4. It has plumbed on Monday a two-month low of $ 0.9275.
The US dollar was little changed at 102.495 yen JPY=, well below the four-month peak of 103.15 hit last week.
The greenback was capped by a fall in Treasury yields overnight after weaker-than-expected US non-farm payrolls data on Friday knocked it off the 103 threshold.
Treasury yields fell as the bond market retained its bullish tone after rallying Friday on the jobs report.
The euro was also effectively flat, at $ 1.3421 EUR= after being hoisted from eight-month lows below $ 1.34 in wake of Friday’s US jobs data release.
The euro has made little further headway since Friday’s bounce, weighed by caution ahead of a European Central Bank meeting on Thursday.
In commodities, Brent held steady above $ 105 a barrel despite ample crude supplies, underpinned by political tension in the Middle East and North Africa and expectations that data will show a further draw on US crude inventories last week.
Brent crude LCOc1 rose for the second straight session, climbing 14 cents to $ 105.55 after gaining 57 cents on Monday.
