Yahoo Finance Asian Shares Dip After Japanese Manufacturing Activity Disappoints
The major Asia Pacific stock indexes are trading mixed at the mid-session on Thursday with most under pressure, bucking the trend set by Wall Street on previous day. Asian shares are primarily lower with Australia showing a modest gain.
Traders are blaming a number of factors on the weakness including concerns over U.S.-China trade relations, a potential global recession and political unrest in Hong Kong. Some say weak manufacturing activity in Japan helped turn the intraday trend lower. Others are citing position squaring ahead of a number of speeches at the central bankers’ symposium at Jackson Hole, Wyoming on Friday. The most watched speaker is expected to be Federal Reserve Chairman Jerome Powell.
At 04:48 GMT, Japan’s Nikkei 225 Index is trading 20618.66, up 0.09 or 0.00%. South Korea’s KOSPI Index is at 1958.36, down 6.29 or -0.32% and Hong Kong’s Hang Seng Index is at 25040.98, down 229.06 or -0.87%.
In China, the Shanghai Index is at 2875.04, down 5.29 or -0.18% and in Australia, the S&P/ASX 200 is at 6508.30, up 25.00 or +0.39%.
Japan’s Manufacturing Shrinks, Services Sector Expands
Japanese manufacturing activity shrank for a fourth straight month in August as export orders fell at a sharper pace, a preliminary business survey showed on Thursday. However, services sector activity expanded at the fastest pace in nearly two years, suggesting resilient demand is continuing to offset some of the strong external pressures on the economy.
The Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) rose to a seasonally adjusted 49.5 from the final 49.4 in the previous month, but stayed below the 50.0 threshold that separates contraction from expansion for a fourth month. Traders were looking for reading of 49.8.
Australian PMI Misses Forecast
Australian manufacturing PMI, published by both Commonwealth Bank and Markit slowed to 51.3 from 51.6 in July, but the composite reading slumped below 50 to 49.5 due to a massive under-performance by the service sector.
Modest Reaction to FOMC Minutes
U.S. shares showed little reaction to the Fed minutes. This tone carried over to the trade in Asia. In its minutes, Fed policymakers agreed the move to cut the benchmark interest rate by 25 basis points, should be viewed as an indication that there is a “preset course” for future cuts. But, we already knew that so the focus for investors now shifts to Fed Chief Powell’s speech at Jackson Hole.
Shortly after the release of the minutes, the 2-year/10-year Treasury yields inverted briefly for the second time in a week. This move was likely a warning to the Fed that it is going to have to respond aggressively to the threat of a recession. Currently, the markets are pricing in a 25-basis point rate cut in September.
This article was originally posted on FX Empire
