Asia: China falls more than 8% on disappointing data and weak commodity prices
Asian stocks fell on Monday following negative data from China and resumed selling in commodities weighing heavily on investor sentiment.
BHP Billiton Ltd.
$44.63
08:30 19/04/24
Newcrest Mining Limited
$0.00
05:35 09/11/23
Nikkei 225
37,068.35
09:44 19/04/24
The Shanghai composite index plunged 8.47%, its worst performance in three weeks. The drop was due to the release of data which showed industrial profits fell 0.3% in June and a decline in commodity prices.
Last Friday markit's China manufacturing PMI published fell to 48.2 in July from 49.4 in June. The figure was significantly weaker than expectations of 49.6 points.
Capital Economics analyst Julian Evans-Pritchard said at the time that the reading suggests that "recent improvements in economic momentum may have been derailed this month by weaker foreign demand".
However, the economist added he believes recent policy easing "has yet to fully feed through into stronger economic activity and expect policy-makers to respond to signs of weakness by stepping up support in order to prevent growth from slipping much further this year".
In other news, China's State Council announced last Friday it would allow the country's currency to trade in a wider range.
As a result, Hong Kong's Hang Seng was also down 3.11%. Central China Securities, a brokerage based in Hong Kong, said it plans to raise $2.48bn through a sale of shares in order to expand its business.
In Japan, the Nikkei 225 fell 0.95% as the yen strengthened to the highest level in two weeks.
In economic data, corporate service prices rose 0.4% in June, lower than 0.6% same time last year.
Cameras manufacturer Canon lost 0.75% after announcing a cut in its earnings outlook for the full-year and a 16% decrease in profits during the last quarter. This was due to the increase of people taking pictures with their phones instead of digital cameras.
On the bright side, Australia's ASX rose 0.43% driven by gains in the gold and mining sectors.
Newcrest Mining gained 4.53% and BHP Billiton rose 2.31% despite weaker commodities.
Brenda Kelly from London Capital Group said the Reserve Bank of Australia "may well, in the face of the present commodity rout emit more dovish noises in respect of Aussie strength".