Japanese stocks rose Thursday on the back of a weakening yen, but most other Asia markets fell, as data showed manufacturing activity cooling further in China, and after investors hoping for major new Federal Reserve stimulus were disappointed.
China’s Shanghai Composite CN:000001 -1.24 percent dropped 1 percent, while South Korea’s Kospi KR:SEU -0.75 percent and Hong Kong’s Hang Seng Index HK:HSI -0.78 percent each declined 0.7 percent, and Australia’s S&P/ASX 200 index AU:XJO -0.67 percent lost 0.6 percent.
Japan’s Nikkei Stock Average JP:100000018 +0.96 percent, however, ended the morning session 1 percent higher, with the midday break coming just moments before the Chinese data were released.
Stocks mostly extended losses after the data, an initial reading of China’s HSBC manufacturing Purchasing managers’ Index, which showed activity slowing in June from the previous month. Read more on HSBC’s China manufacturing PMI.
Commodity-tied firms were notable decliners following the data. In Australia, iron-ore producer Fortescue Metals Group Ltd AU:FMG -1.43 percent FSUGY +0.30 percent traded down 1.1 percent, and copper producer PanAust Ltd AU:PNA -2.43 percent fell 2.4 percent, while in Hong Kong, China Coal Energy Co. HK:1898 -3.03 percent CCOZY +3.15 percent gave up 2.9 percent.
Energy firms were also mainly weaker across Asia, tracking a sharp drop for Nymex crude-oil futures CLN2 -3.53 percent Tuesday.
Sydney-listed Santos Ltd AU:STO -3.39 percent SSLTY +0.98 percent sank 3.1 percent, and Cnooc Ltd HK:883 -3.23 percent CEO -0.88 percent tumbled 3.4 percent in Hong Kong.
Chinese financials also came under selling pressured. Bank of Communications Co. HK:3328 -1.34 percent BCMXY -5.13 percent dropped 1.1 percent in Hong Kong, while in Shanghai, New China Life Insurance Co. CN:601336 -5.08 percent slumped 3.8 percent and Haitong Securities Co. CN:600837 -1.79 percent lost 0.9 percent.
Losses for exporters weighed in Seoul. Samsung Electronics Co. SSNGY 0.00 percent dropped 1.5 percent, and Hynudai Motor Co. HYMLY -0.0052 percent shed 1 percent.
The subdued session followed losses for most US stock indexes on Wednesday after the Federal Reserve extended its “Operation Twist” programme to push down long-end yields, but disheartened some investors by failing to issue more far-reaching measures. Read more on the US session.
Ending a two-day meeting, the Fed said it would expand its programme to replace short-term bonds with longer-term debt by $267 billion through the end of 2012. See report on Fed bond buys.
The central bank also cut its growth forecasts, with Chair Ben Bernanke saying the labour market had lost some steam and leaving the door open to more stimulus if the situation deteriorates. Read more on Fed’s outlook cut.
Mitul Kotecha, Credit Agricole strategist said the Fed’s decision “left markets with a taste of disappointment.”
“Nonetheless, any downside to risk assets was limited by the potential for more quantitative easing somewhere down the line,” Kotecha said.
But while much of the region’s markets moved lower, the weaker Japanese yen supported major Tokyo-listed exporters.
Sony Corp. JP:6758 +0.54 percent SNE +3.02 percent rose 1.3 percent, Kyocera Corp. JP:6971 +2.71 percent KYOCF -10.23 percent climbed 3.2 percent, and Panasonic Corp. JP:6752 +2.99 percent PC +1.88 percent jumped 3.5 percent higher, as the euro moved above JPY 100, and with the dollar also rising against the yen overnight.
Japanese car makers also extended recent gains, with Nissan Motor Co. JP:7201 +2.27 percent NSANY -0.52 percent up 2.1 percent, and Toyota Motor Corp. JP:7203 +0.98 percent TM +0.64 percent adding 1 percent.
Shares of Honda Motor Co. JP:7267 +2.99 percent HMC -0.40 percent climbed 3.1 percent after Credit Suisse raised its price target on the shares, one day after a ratings upgrade from Nomura.
Recently battered shares of Renesas Electronics Corp. JP:6723 +4.63 percent RNECY -1.03 percent jumped 4 percent after a Dow Jones Newswires report that Hitachi Ltd JP:6501 0.00 percent HTHIF +3.51 percent NEC Corp. JP:6701 0.00 percent NIPNF +7.14 percent and Mitsubishi Electric Corp. JP:6503 +1.10 percent planned to provide Renesas with JPY 50 billion ($630 million) in aid.
Hitachi edged up 0.2 percent, NEC shares added 0.8 percent, and Mitsubishi Electric advanced 1.4 percent. -By Virginia Harrison