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Asian shares at fresh three-month highs on China PMI surprise

Stock Markets Nov 01, 2019 02:51AM ET
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By Andrew Galbraith

SHANGHAI (Reuters) - Asian shares scaled three-month highs on Friday as a surprise bounce in Chinese manufacturing activity eclipsed doubts raised by a Bloomberg news report over whether the United States and China can reach a long-term trade deal.

Shares in Europe were set to follow Asia's lead. Pan-region Euro Stoxx 50 futures (STXEc1) were up 0.28%, German DAX futures (FDXc1) gained 0.34% and FTSE futures (FFIc1) added 0.19%.

Factory activity in China expanded at its fastest pace in more than two years in October as export orders and production rose, a private business survey showed on Friday.

The expansion, which beat expectations and contrasted with the dour results of an official survey Thursday, helped to boost Chinese blue chips (CSI300), which surged 1.6%.

Hong Kong's Hang Seng (HSI) added 0.65% and Seoul's Kospi (KS11) rose 0.77%. The Nikkei (N225) underperformed, ending the day down 0.33%.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) reversed early losses to touch fresh three-month highs, and was last up 0.4%.

The index's performance reflected a results season that has shown companies to be more resilient than expected, said Jim McCafferty, head of Equity Research, Asia ex-Japan at Nomura.

"If you look at the micro data supplied by the companies, then it tells you that customers ... are continuing to do business. So I think that we are in a better state than perhaps investors thought we were just one month ago," he said.

Earlier on Friday, losses had mirrored falls in global stock markets, as MSCI's gauge of equity performance in 47 countries (MIWD00000PUS) fell from 20-month highs after a report that cast doubt on the likelihood of a U.S.-China trade deal.

On Wall Street, the Dow Jones Industrial Average (DJI) fell 0.52%, the S&P 500 (SPX) lost 0.30% and the Nasdaq Composite (IXIC) dropped 0.14%.

Efforts by Washington and Beijing to end their bruising nearly 16-month trade war appeared on track as U.S. President Donald Trump said on Thursday said that the two sides would soon announce a new venue for the signing of a "Phase One" trade deal after Chile cancelled a planned summit set for mid-November.

Optimism was dampened by a Bloomberg report citing unnamed Chinese officials airing doubts over whether a comprehensive long-term trade deal is possible.

China's doubts were "not entirely unexpected", Greg McKenna, strategist at McKenna Macro, said in a morning note to clients, noting that the falls in equity markets overnight were relatively small.

Retreats in the S&P 500 and the U.S. 10-year Treasury yield indicated some technical resistance in the market, he said.

"Either way, today's deluge of manufacturing PMI's and then U.S. non-farm (payrolls) tonight will be an important factor in where markets head next," McKenna said.

The Institute for Supply Management is due to release data from its survey of purchasing managers on Friday. A separate PMI survey released Thursday by the Chicago Fed showed a sharper contraction in midwestern manufacturing activity for October.

The yield on benchmark 10-year Treasury notes (US10YT=RR) was higher at 1.6963% compared with its U.S. close of 1.691% on Thursday. The two-year yield (US2YT=RR), sensitive to market expectations of Federal Reserve policy, was at 1.536%, up from a U.S. close of 1.526%.

The Fed cut interest rates for a third time this year on Wednesday to help sustain U.S. growth, but signalled there would be no further reductions unless the economy takes a turn for the worse.

In the currency market, the dollar was down 0.05% against the yen at 107.97 .

The euro (EUR=) was 0.1% higher on the day at $1.1161, while the dollar index (DXY), which tracks the greenback against a basket of six major rivals, was down 0.12% at 97.328.

U.S. crude (CLc1) rose 0.28% to $54.33 a barrel and Brent crude (LCOc1) inched up 0.03% to $59.64 per barrel.

Spot gold eased 0.24% to $1,509.54 per ounce. [GOL/]

(Graphic: China PMIs - https://fingfx.thomsonreuters.com/gfx/mkt/12/8098/8029/pmidisagreement.png)

Asian shares at fresh three-month highs on China PMI surprise
 

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Comments (5)
dhdh bdbd
dhdh bdbd Nov 01, 2019 8:15AM ET
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and yet Hong Kong sinked into a recession....
Bob Blahblah
Bob Blahblah Nov 01, 2019 6:19AM ET
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quoting chinese #s, shill drivel hackery at its worst comrades
Nov 01, 2019 3:02AM ET
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2016: bloomberg find out that chinz probably faked its gdp and caixin data markets sink on that deluge still they trapnin this never believe caixin
Danny Hg
Danny Hg Nov 01, 2019 1:38AM ET
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Ha Reuters! why use the Caixin numbers rather than the official China PMI coming in below expectations?
Nov 01, 2019 1:22AM ET
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not this fast caixin is chinese markit it isnt international this is biggest data that they can manipulate yesterday 3 pmis down and now 1 up yea only a idlot traps in this fall
Dee Morris
Dee Morris Nov 01, 2019 1:22AM ET
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These, of course are made up numbers to temporarily help their market from having a complete week of "fails". Someone should publish data marked "China unmanipulated vs. manipulated data". One day we will have A.I. that will recognize fake data like our A.I that recognizes fake news.
Bade Sahib
Bade Sahib Nov 01, 2019 1:22AM ET
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All Data fake gonwith actual company earnings
 
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