Asian shares flat on mixed China manufacturing outlook, Tokyo shut

Investing.com - Stocks in Asia were flat with mixed readings on Chinese manufacturing activity and markets shut in Tokyo leading to light trade.

The final reading on HSBC's manufacturing purchasing manager index came in at 50.4 in October, unchanged from a preliminary reading but higher than 50.2 in September.

"The HSBC China Manufacturing PMI rose to 50.4 in the final reading for October, up from 50.2 in September, and unchanged from the flash reading released earlier," Qu Hongbin, HSBC's chief China economist, said in a statement.

"Compared to the flash readings the new orders and new export orders sub-indices saw small downward revisions but both remained in expansion territory. Meanwhile, the employment and inventory sub-indices saw small upward revisions. Overall, the manufacturing sector continued to stabilize in October, however the sequential momentum likely weakened. The economy still shows clear signs of insufficient effective demand. We still see uncertainties, given the property downturn as well as the slow pace of global recovery, and expect further monetary and fiscal easing measures in the months ahead."

The improvement in the private measurement of factory health in China contrasted with an official reading over the weekend, although taken together the data suggest that more help may be needed to boost the world's second largest economy, despite a series of government support measures already aimed at aiding growth.

China's official Manufacturing Purchasing Managers' Index dropped to 50.8 in October from 51.1 in September, according to the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics. The reading marked a five-month low.

The Hang Seng Index was roughly flat, while Australia's S&P/ASX 200 was off by 0.2%. The Shanghai Composite Benchmark was up 0.2%.

With Japan's market at its highest level in nearly seven years and the yen at its highest level in six years, global markets took cue from Asia Friday.

Last week, U.S. stocks rallied on Friday after Japan said it would expand its monetary easing programs, including allowing pension funds to invest more in foreign equities.

The Dow 30 rose 1.13%, the S&P 500 index rose 1.17%, while the NASDAQ Composite index rose 1.41%.

The Bank of Japan said it would raise its monetary base target to an annual increase of ¥80 trillion from ¥60-70 trillion, a preemptive move to steer the economy away from deflationary decline while improving the chances of reaching inflation goals.

Adding to the rally, a Japanese government panel overseeing the Government Pension Investment Fund approved plans on Friday for the fund to raise its holding of foreign stocks to 25% of its portfolio from 12%.

Strong data out of the U.S. also bolstered stock prices.

The Thomson Reuters/University of Michigan final consumer sentiment index rose to a seven-year high of 86.9 this month from 86.4 in September. Analysts had expected the index to remain unchanged.

In addition, industry data showed that the Chicago purchasing managers' index rose to a three-and-a-half year high of 66.2 in October from 60.5 in September, confounding expectations for a reading of 60.0.

On Monday, The U.S. releases construction spending for September, seen up 0.7% on month, and the ISM data is due on manufacturing assessments.