Asia report: Markets mixed as China service sector growth slows

Markets in Asia finished in a mixed state on Wednesday, as investors digested fresh data on China’s services sector, while Donald Trump issued a ban on transactions with a number of Chinese software companies.

In Japan, the Nikkei 225 was down 0.38% at 27.055.94, as the yen weakened 0.08% against the dollar to last trade at JPY 102.81.

Fashion firm Fast Retailing was down 2.48%, while among the benchmark’s other major components, automation specialist Fanuc was up 0.59% and technology conglomerate SoftBank Group was 1.45% firmer.

The broader Topix index managed gains of 0.28% by the end of trading in Tokyo, closing at 1,796.18.

On the mainland, the Shanghai Composite was ahead 0.63% to 3,550.88, and the smaller, technology-heavy Shenzhen Composite slipped 0.03% to 2,421.51.

A number of Chinese software companies were in focus, after US president Donald Trump signed an executive order barring transactions with eight apps based in the country.

They included WeChat Pay and Alipay, although the order was only due to go into effect after Trump leaves office later in the month.

On the data front, the unofficial Caixin/Markit services purchasing managers’ index fell to 56.3 for December from 57.8 in December.

While that indicated slower growth for the sector, it was still above the 50-point level that separates expansion from contraction.

“The consensus was very optimistic, given the services subindex of the official PMI fell, and the Caixin gauge looked even more exposed to a correction,” said Pantheon Macroeconomics chief Asia economist Freya Beamish.

“Still, the index remains at very strong levels, and a further slowdown seems likely, at least until the vaccine is rolled out.”

Beamish said the forward-looking indices also softened, particularly on the new export side, with that subindex now only modestly above 50, as a result of virus resurgence in overseas markets.

“Business confidence, however, improved likely on vaccine hopes.

“Employment was our main concern with the Caixin manufacturing PMI, but headcount continued to rise in the services sector for the second month in a row.

“Finally, the report adds weight to our impression that services inflation is about to leap, with firms increasing their output charges at the quickest pace since January 2008.”

South Korea’s Kospi was down 0.75% at 2,968.21, while the Hang Seng Index in Hong Kong added 0.15% to 27,692.30.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics down 2.03% while SK Hynix rose 0.38%.

Oil prices were higher at the end of the Asian day, with Brent crude last up 1.23% at $54.26 per barrel, and West Texas Intermediate 0.76% firmer at $50.31.

In Australia, the S&P/ASX 200 lost 1.12% to 6,607.10, with the energy subindex rising 1.61% on the back of gains for oil plays in Sydney.

Beach Energy was up 1.95% and Santos grew 2.05%, after Saudi Arabia agreed to voluntary cuts to production in February and March led to a rise in oil prices.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.25% weaker at 13,333.93, with the country’s energy generator-retailers in a mixed state.

Contact Energy was up 2.27% in Wellington, while Meridian Energy was 0.76% weaker.

Both of the down under dollars were stronger on the greenback, with the Ausie last ahead 0.67% at AUD 1.2799, while the Kiwi advanced 0.8% to NZD 1.3682.