Asian stock markets retreated Thursday, failing to hold on to monetary-easing inspired gains from the previous session, as energy firms declined along with U.S. crude futures and as lackluster Chinese manufacturing data did little to lift the gloom.
Japan’s Nikkei Stock Average 100000018 fell 1.6% amid renewed yen strength, while South Korea’s Kospi SEU lost 0.9%, and Australia’s S&P/ASX 200 Index XJO lost 0.5%.
In Chinese trading, Hong Kong’s Hang Seng Index HSI declined 0.9%, while the Shanghai Composite index 000001 fell 1.3%.
Preliminary September manufacturing data from HSBC showed a reading of 47.8, up from 47.6 in August, but still well below the 50 mark that separates expansion from contraction. Read more on China PMI.
“China’s manufacturing growth is still slowing, but the pace of slowdown is stabilizing. Manufacturing activities remain lackluster, thanks to weak new business flows and longer-than-expected destocking process,” HSBC chief China economist Hongbin Qu said in a statement accompanying the data.
KGI Asia Chief Operating Officer Ben Kwong saw the data weighing on the equity markets Thursday, saying: “We’re under some selling pressure after the PMI. The value was still below 50 and still in contraction. It won’t help to change market worries about the slowing Chinese economy.”
Hong Kong-listed firms tied to China’s economic health traded lower after the data, including Sun Hung Kai Properties Ltd. 16SHGKY, down 1.8%; and Henderson Land Development Co. 12HLDVF, lower by 2.1% in the property sector.
China-exposed miners in Australia declined after the data, with Rio Tinto Ltd. RIO RIO down 2.1% and BHP Billiton Ltd. BHP BHP lower by 1.5% while iron-ore extractor Fortescue Metals Group Ltd. FMG FSUMF fell 2.4%.
Metal-related firms also fell in Shanghai, with Jiangxi Copper Co. 600362 down 2.6% and Aluminium Corp. of China Ltd., or Chalco, 601600 down 1.5%. In Hong Kong, Jiangxi 358JIXAY lost 3.2%.
Energy firms dropped across the region after benchmark crude-oil futures hit a six-week low in New York trading, with some pinning the 3.5% drop on Wednesday to comments from unnamed Saudi Arabian officials on prices and to U.S. data that raised concerns about market oversupply. Read more on Wednesday’s crude-oil session,
With oil futures falling to just above $91 a barrel in Asian electronic trading hours, Japanese energy major JX Holdings Inc, 5020JXHGF fell 2% and rival Inpex Holdings Inc. 1605IPXHY lost 3.5%.
Likewise, energy firms were the worst performers by sector in Australia, as Linc Energy Ltd. LNC LNCGY dropped 6.4% and Woodside Petroleum Ltd. WPL WOPEF dropped 2.2%.
Korean energy firms were also pressured, as SK Innovation Co. 096770 traded down 4.3%, and S-Oil Corp. 010950 retreated 4.2%.
Among Chinese energy companies, Cnooc Ltd. 883 CEO lost 4% in Hong Kong, while PetroChina Ltd. 857 PTR lost 1.4% in Hong Kong and 1.3% in Shanghai, and China Shenhua Energy Co. 1088CSUAY declined 2.6% in Hong Kong and 1.8% in Shanghai.
Asian shares were broadly backing away from gains made Wednesday, when some markets hit multi-month highs after the Bank of Japan said that it would undertake more asset buying to support its economy, joining recent easing moves in the U.S. and Europe.
“Most of the [Asian] indexes have already reached relatively high levels that reflect expectations of this kind of easing,” said Kwong at KGI.
Going forward, he said “I think that investors now have to watch economic numbers to see whether there is any sign of genuine improvement” for share markets to extend gains.
Japan’s August trade deficit of ¥754.1 billion ($9.62 billion) didn’t give much reason for optimism, widening from July’s ¥517.4 billion trade gap, although it did come in below analyst expectations for a ¥797.9 billion deficit. Read more on Japan’s August trade data.
The yen weakened on Wednesday after the Bank of Japan easing announcement but extended a recovery through the session on Thursday as the market mood soured following the Chinese PMI data.
Japanese exporters gave up gains from the previous session, with Sony Corp. 6758 SNE down 4.6% and Nissan Motor Co. 7201 NSANY losing 3.4%, while Olympus Corp. 7733 OCPNF retreated 2.3%.
Among gainers Thursday, reported plans by Nippon Telegraph & Telephone Corp. 9432 NTT to buy back up to $1.9 billion of its shares prompted a target-price hike from Nomura and sent the shares rallying by 7.1%. Read more on NTT’s share buyback.