Asia report: Most markets fall amid slower China factory growth

Stocks in Asia closed mostly lower on Thursday, as investors digested a private survey which showed a slowing in factory activity in June in China.

In Japan, the Nikkei 225 was down 0.29% at 28,707.04, as the yen weakened 0.38% to last trade at JPY 111.53.

Technology giant SoftBank Group was down 0.63%, while among the benchmark’s other major components, robotics specialist Fanuc eked out gains of 0.13%, and Uniqlo owner Fast Retailing was hoisted 0.24% higher.

The broader Topix index lost 0.22% by the end of trading in Tokyo, settling at 1,939.21.

Sentiment among large manufacturers was on the rise in the country, according to the Bank of Japan, with the headline reading from its quarterly Tankan survey turning out a reading of 14, up from 5 three months ago.

“Japan’s Tankan survey showed a bounce for large manufacturers, with the index at its highest level in two and a half years,” said Neil Wilson of Markets.com.

“Services were less positive, at +1 from -1,” he noted.

On the mainland, the Shanghai Composite slipped 0.07% to 3,588.78, and the smaller, technology-centric Shenzhen Composite was 0.97% lower at 2,442.26.

The unofficial Caixin/Markit manufacturing purchasing managers’ index came in at 51.3 for June, the data company said earlier in the session, down from the 52 reading for May.

That confirmed the picture of slowing growth for manufacturing painted by Beijing’s official PMI data on Wednesday, but was still above the 50-point level that separates expansion from contraction.

“The drop was close to our expectations; granted, the official gauge was near to stable, but the Caixin was more exposed,” said Pantheon Macroeconomics chief Asia economist Freya Beamish.

“Indeed, panelists highlighted the recent uptick in Covid cases and supply chain difficulties as the main burden.”

Beamish noted that a major port was closed in south China for much of the month, though it had now reopened.

“The Caixin survey includes more smaller and exporting firms than the official gauge, and the new export orders index fell to 50.”

Traders in Hong Kong enjoyed a day off for the Special Administrative Region Establishment Day holiday, while South Korea’s Kospi was 0.44% weaker at 3,282.06.

The blue-chip technology stocks were on the back foot in Seoul, with Samsung Electronics down 0.74%, and SK Hynix losing 2.35%.

Oil prices continued to head northwards as the region went to bed, with Brent crude last up 0.93% at $75.31 per barrel, and West Texas Intermediate advancing 0.93% to $74.15.

In Australia, the S&P/ASX 200 was down 0.65% at 7,265.60, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was the region’s odd one out, managing gains of 0.23% to 12,683.63.

The down under dollars were weaker against the greenback, with the Aussie last off 0.16% at AUD 1.3356, and the Kiwi retreating 0.07% to NZD 1.4320.