Chinese shares sank Tuesday after a weak manufacturing reading overshadowed an easing in bank lending while Japan and other Asian markets were mostly higher.
The Shanghai Composite Index retreated 0.4 percent to 2,677.38 points while Tokyo’s Nikkei 225 advanced 0.3 percent to 16,067.52. Sydney’s S&P ASX 200 gained 0.8 percent to 4,922.30 and India’s Sensex added 2.2 percent to 23,505.66. Hong Kong’s Hang Seng advanced 0.1 percent to 19,128.06 and Bangkok, Jakarta and New Zealand also rose. Benchmarks in Singapore and Malaysia declined. Korean markets were closed for a holiday.
A survey showed that Chinese factory activity in February fell to its lowest level in five months. Employment shrank at its fastest rate since the start of 2009 in the aftermath of the global crisis. “The economy’s road to stability remains bumpy,” said He Fan, Caijing magazine’s chief economist, in a report. “The government needs to press ahead with reforms, while adopting moderate stimulus policies and strengthening support of the economy in other ways to prevent it from falling off a cliff.”
In a move to shore up slowing economic growth, Beijing freed more money for lending by lowering the amount commercial lenders must hold in reserve. The change reduced required reserves by 0.5 percent points effective Tuesday, which will release several hundred billion yuan (tens of billions of dollars) into the market. Chinese trading is heavily influenced by the availability of credit, so an easing can lead to higher prices.
The government reported consumer spending fell 3.1 percent in January from a year earlier following December’s 4.4 percent decline. That was despite a slight improvement in employment. “Today’s figures suggest that private consumption continued to fall in Q1,” said Marcel Thieliant of Capital Economics in a report.
“Positive Chinese sentiments would be extended partially to the rest of Asia,” said Bernard Aw of IG in a report. “However, with the mixed and weak leads from overnight markets, any positivity may be restrained. Australia and Japan have already started off on a cagey note.”
Wall Street stocks fell, erasing nearly all the market’s gains for the month, after health-care stocks declined on weak earnings and lower natural gas prices pushed down energy shares. Investors lost enthusiasm for stocks after two straight weekly gains. The Dow Jones industrial average lost 123.47 points, or 0.7 percent, to 16,516.50. The Standard & Poor’s 500 index fell 15.82 points, or 0.8 percent, to 1,932.23. That pushed the S&P 500 to its third monthly loss. The Nasdaq composite index retreated 32.52 points, or 0.7 percent, to 4,557.95.
Benchmark U.S. crude added 7 cents to $33.83 in electronic trading on the New York Mercantile Exchange. The contract added 97 cents on Monday to close at $33.75. Brent crude, used to price international oils, jumped $1.13 on Monday to $36.57. On Tuesday it rose 3 cents to $36.60.
The dollar rose to 112.62 yen from Monday’s 112.49 yen. The euro edged up to $1.0883 from $1.0880.