Hong Kong: Asian markets mostly fell Monday as China shares were dragged down by poor manufacturing figures and investors followed a drop on Wall Street. The survey of Chinese manufacturing activity showed a drop to a two-year low in July, suggesting the world's second largest economy faces challenges in the third quarter. Shanghai was down 1.71 per cent, Tokyo lost 0.48 per cent, Sydney eased 0.46 per cent and Hong Kong dropped 0.84 per cent. Seoul was 0.90 per cent lower.
In Japan, investors were weighing earnings while energy-related shares were pushed lower as oil extended its biggest monthly drop in seven years. Investor sentiment in China reflected the final reading of Caixin's Purchasing Managers' Index (PMI), which came in at 47.8 for July. The figure was below the 49.4 registered in June and was the weakest reading since 47.7 in July 2013, according to previous data, with a figure above 50 signalling growth and anything below indicating contraction.
An official purchasing managers' index released at the weekend had already showing a decrease for the month, decelerating to 50.0 from 50.2 in June. Asian markets also got a negative lead from Wall Street where stocks closed lower Friday following poor earnings from ExxonMobil and Chevron and a fall in oil prices. The Dow Jones Industrial Average slipped 0.31 per cent, while the broad-based S&P 500 dropped 0.22 per cent. The tech-rich Nasdaq Composite Index edged down 0.01 per cent.
Technology and energy companies slumped in Shanghai, while analysts predicted China's government would further ease credit in the second half of 2015 in an attempt to shore up growth. "Fiscal policies will be the key to growth stabilisation measures in the second half," Zhu Qibing, a Beijing-based macroeconomic analyst at China Minzu Securities Co., told Bloomberg News. "The government's recent signals and policy direction clearly show that a new round of fiscal stimulus is coming," he said.
In Tokyo forex trade, the dollar was at 124.06 yen early Monday compared with 123.91 yen in New York late Friday. The euro bought $1.0976 and 124.01 yen against $1.0984 and 136.10 yen in US trade. Oil prices were lower in Asian trade over concerns about a supply glut. US benchmark West Texas Intermediate for September fell 27 cents to $46.85 while Brent crude for September eased 30 cents to $51.91.
Bloomberg News reported Iranian Oil Minister Bijan Namdar Zanganeh as saying output could increase by 500,000 barrels a day within a week after international sanctions are eased and by one million barrels a day within a month after that. Gold fetched $1,094.57 an ounce compared with $1,098.40 on Friday.
