Asian equities are generally lower today on weak Chinese manufacturing data. Nikkei drops more than -120pts or -0.6% while HK HSI drops -245 pts, near to -1%. The newly renamed Caixin PMI fell -1.2 points to 48.2, the lowest level in 15 months. The market had anticipated a rise to 49.8. It was the fifth straight month below 50. The weak reading was seen as a big surprise for the markets and reflected the negative impact of recent stock market crash in China. In addition, the recovery in Q2 might not carry on to Q3 on weaker foreign demand and downside risks are intensifying. Aussie responded to the data by extend recent down trend against the greenback and reaches as low as 0.7267 so far.
In Japan, the manufacturing PMI rose 1.3 points to 51.4 in July. However, Japanese investor sentiment was weighed down by IMF's warning that Japan's debt would probably triple the size of the economy by 2030 if the government fails to act now. The world lender indicated that "Japan's public debt is unsustainable under current policies" and "a credible medium-term fiscal consolidation plan is needed" to "put debt on a downward path".
Dollar continues to consolidate against other major currencies except Aussie. The strong job data released yesterday provided little support to the greenback. IMF warned of the risk of dollar's strength. The world lender indicated in the annual spillovers report lower oil prices, more monetary stimulus in the Eurozone and Japan and expectations for interest rate rises in the US and UK created a "spillover-rich" environment. As noted in the report, "sustained US dollar appreciation associated with expected divergence in monetary policies among systemic advanced economies poses significant risks for other countries".
Looking ahead, Eurozone PMIs will be the main focus today while US will release new home sales.