Asia report: Markets mixed as China PMI beats forecasts

(Sharecast News) - Markets in Asia finished in a mixed state on Friday, with equities in Japan suffering a serious slide, as investors digested the worst ever contraction in the United States economy, according to fresh data released overnight.
In Japan, the Nikkei 225 was down 2.82% at 21,710.00, as the yen strengthened 0.02% against the dollar to last trade at JPY 104.71.

Of the major components on the benchmark index, automation specialist Fanuc was down 3.88%, fashion firm Fast Retailing lost 3.2%, and technology conglomerate SoftBank Group slid 4.39%.

The broader Topix index was also off 2.82% by the end of trading in Tokyo, closing at 1,496.06.

On the mainland, the Shanghai Composite recovered from earlier losses to settle up 0.71% at 3,310.01, and the smaller, technology-heavy Shenzhen Composite was 1.33% firmer at 2,256.87.

The positive moves in China came after Beijing's official purchasing managers' index arrived above expectations for July at 51.1, beating the Reuters-polled forecast for 50.7.

A reading above 50 points indicates expansion, while one below 50 signals a contraction.

South Korea's Kospi was 0.78% weaker at 2,249.37, while the Hang Seng Index in Hong Kong lost 0.47% at 24,595.35.

Both of the blue-chip technology stocks were weaker in Seoul, with Samsung Electronics down 1.86%, and chipmaker SK Hynix losing 2.93%.

Investors spent the early parts of the session digesting a disastrous GDP reading out of the US overnight, with the country's economy shrinking by 32.9% in the second quarter, making for the worst fall ever.

It was still not as bad as market watchers had anticipated, however, with a Dow Jones poll of economists having expectations set for a 34.7% fall.

The employment market stateside was continuing in line with expectations as the Labor Department reported 1.434 million claims last week.

"This rising uncertainty about the US economy, heading into the upcoming November election also appears to be weighing heavily on the US dollar which has continued to fall heavily in Asia trading, falling to a fresh three year low, against the euro as well as a basket of currencies," said CMC Markets chief market analyst Michael Hewson.

"President Trump's talk of an election delay probably hasn't gone down too well either, and while the president has no legal power to change the date of the election - only Congress does - the fact he floated the idea, as well as the lack of progress on a new stimulus deal between Democrats and Republicans, suggests that the US dollar could have further to fall, as the political bickering gets more rancorous."

Oil prices were higher as the region entered the weekend, with Brent crude last up 0.84% at $43.30 per barrel, and West Texas Intermediate adding 0.63% to $40.17.

In Australia, the S&P/ASX 200 was down 2.04% at 5,927.80, as the big four banks declined in Sydney.

Australia and New Zealand Banking Group was down 2.18%, Commonwealth Bank of Australia lost 2.76%, National Australia Bank was off 2.54%, and Westpac Banking Corporation slid 3.28%.

Across the Tasman Sea, New Zealand's S&P/NZX 50 managed gains of 0.3% to close at 11,727.63, after a choppy session.

Local logistics giant Mainfreight rocketed 7.6% following a decent trading update in the previous session, hitting a record close by end-of-play in Wellington.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.09% at AUD 1.3911, and the Kiwi retreating 0.29% to NZD 1.4969.