Asia report: Most markets rise as China manufacturing data surprises

Markets in Asia finished mostly higher on Tuesday, as investors digested more manufacturing data out of China, and continued to monitor the global coronavirus situation.

In Japan, the Nikkei 225 was up 1.34% at 26,787.54, as the yen weakened 0.05% against the dollar to last trade at JPY 104.36.

Of the major components on the benchmark index, robotics specialist Fanuc was up 3.09%, Uniqlo owner Fast Retailing added 1.89%, and technology giant SoftBank Group was ahead 0.39%.

The broader Topix index was 0.77% firmer by the end of trading in Tokyo, at 1,768.38.

On the mainland, the Shanghai Composite was 1.77% firmer at 3,451.94, and the smaller, technology-centric Shenzhen Composite advanced 1.64% to 2,268.55.

The unofficial Caixin/Markit manufacturing purchasing managers’ index (PMI) hit a 10-year high for November, as China’s industrial sector continued to rebound from the outbreak of Covid-19 earlier in the year.

It rose to 54.9 from October’s reading of 53.6, surprising the market, with a Reuters poll of analysts forecasting a fall to 53.5.

The index was also well above the 50-point mark that separates expansion from contraction.

“Solid manufacturing PMIs in Asia for November are driving broad-based foreign exchange gains versus the dollar, and in equity markets across the region,” said Axi chief global market strategist Stephen Innes.

“China's Caixin manufacturing PMI rose to a stronger-than-expected 54.9 in November, Indonesia and Thailand's PMIs printed above 50, and while India's PMI fell to 56.3 from 58.9, it remains well above the 50-mark that demarcates contraction and expansion.”

Innes noted that forex gains were also exerting a “gravitational pull” across G10 markets on Tuesday.

“Central banks in the region are increasingly uncomfortable with forex strength, but their caution is not unusual early in a global economic cycle.

“Relatively attractive yields versus G10 suggest foreign investment flows into local bonds, and equity markets should continue.”

South Korea’s Kospi was up 1.66% at 2,634.25, while the Hang Seng Index in Hong Kong managed gains of 0.86% to 26,567.68.

The blue-chip technology stocks were both stronger in Seoul, with Samsung Electronics up 1.65%, and SK Hynix leaping 3.08%.

The prospects of Covid-19 vaccines being rolled out in the near future helped to boost sentiment, after biotechnology firm Moderna said it was ready to apply to the US Food and Drug Administration (FDA) for the approval of its candidate on Monday.

That development comes after Pfizer and BioNTech said they were looking to start jabs in the US in December, while regulators in the UK were poring over the data for both Pfizer’s vaccine, and one developed by AstraZeneca and the University of Oxford.

Investors were also keeping an eye on developments stateside, after Federal Reserve chair Jerome Powell described the economic outlook in the US as “extraordinarily uncertain” in a statement on Monday.

Powell was due to appear before the Senate Banking Committee alongside Treasury secretary Steven Mnuchin later in the global day.

“US Federal Reserve Chair Powell's testimony before the Senate Banking Committee, released ahead of Tuesday's hearing, is sufficiently cautious on the economic outlook to constrain an aggressive steepening in the US Treasury curve into year-end, which has helped risk sentiment across the board,” said Stephen Innes.

“Rising Covid-19 cases and restrictions tempered the enthusiasm around good vaccine results, but bonds have done the heavy lifting, and risky assets are welcoming the financial condition’s easing.”

Oil prices were higher as the region went to bed, with Brent crude last up 0.19% to $47.97 per barrel, and West Texas Intermediate rising 0.09% to $45.38.

In Australia, the S&P/ASX 200 rose 1.08% to 6,588.50, while across the Tasman Sea, New Zealand’s S&P/NZX 50 once again went against the regional trend, falling 0.3% to 12,729.91.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.1% at AUD 1.3603, and the Kiwi advancing 0.27% to NZD 1.4222.