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 U.S. earnings and relief over Portugal’s rescue of its largest bank.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.4 percent, 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.
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 percent 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 percent 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 U.S. 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 U.S. 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 U.S. 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 U.S. crude inventories last week. [O/R]
Brent crude LCOc1 rose for the second straight session, climbing 14 cents to $105.55 after gaining 57 cents on Monday.
Source : Reuters