HONG KONG (AFP) – Asian markets were mixed Monday as traders took a breather after last week’s rally, but Shanghai hit a 21-month high on hopes of Chinese stimulus measures after a weak manufacturing report.
Wall Street Friday had provided a healthy lead, with the Dow and S&P 500 reaching new highs after Japan’s central bank said it would ramp up its own stimulus programme to kickstart growth.
The dollar held on to Friday’s gains against the yen, sitting at seven-year highs. Friday’s news came days after the US Federal Reserve ended its own stimulus.
Sydney eased 0.36 per cent, or 19.7 points, to 5,506.9, while Seoul dropped 0.58 per cent, or 11.46 points, to close at 1,952.97.
Hong Kong ended 0.34 per cent lower, dipping 82.09 points to 23,915.97. But Shanghai closed 0.41 per cent higher, adding 9.85 points to 2,430.03, its highest since February last year.
Tokyo was shut for a public holiday.
Global markets and the dollar surged on Friday after the Bank of Japan said it would widen its asset-purchasing scheme to boost lending and try to avoid a recession.
After a jump in Asian shares, including a near-five per cent rise in Tokyo, Wall Street powered ahead.
The Dow leapt 1.13 per cent and the S&P 500 added 1.17 per cent – both hitting all-time highs – while the Nasdaq gained 1.41 per cent.
However, dealers took a breather for the first day of November trade, with profit-takers moving in.
China at the weekend released an index of manufacturing activity that showed growth slowed in October, the latest data indicating the world’s second-largest economy slowing down.
The official purchasing managers’ index (PMI) came in at 50.8 last month, the National Bureau of Statistics said, lower than 51.1 in September. Readings above 50 indicate growth while anything below points to contraction.
PMI tracks activity in China’s factories and workshops and is a closely-watched indicator of the health of the economy.
On Monday a separate report by HSBC came in a 50.4, the strongest result since July.
“Overall, the manufacturing sector continued to stabilise in October, however the sequential momentum likely weakened,” said HSBC. “The economy still shows clear signs of insufficient effective demand.”
The figures have raised hopes that Beijing will introduce new economy-boosting measures, with some analysts suggesting officials will cut the amount of cash banks must keep in reserve in order to boosting lending.
“More new infrastructure projects and continuous monetary easing might improve manufacturing for the coming months,” Haitong Securities said, according to Dow Jones Newswires.
On currency markets the dollar bought 112.76 yen – its highest since December 2007 – against 112.25 yen Friday in New York.
The euro was at $1.2489 and 140.85 yen compared with $1.2525 and 140.71 yen.
Oil prices were mixed. US benchmark West Texas Intermediate for December delivery fell 39 cents to $80.15, while Brent crude was down 53 cents at $85.33.
The price of gold fell to $1,168.95 an ounce from $1,173.87 late Friday.