Stock market today: Asian markets lower after Japan factory activity, China services weaken

Stock market today: Asian markets lower after Japan factory activity, China services weaken

BEIJING (AP) — On Thursday, the majority of Asian stock markets saw declines due to weakened factory activity in Japan and slowed growth in China’s service industry.

Shanghai, Hong Kong, and Seoul experienced drops in their stock markets, while Tokyo’s market saw an increase. Additionally, oil prices saw a slight decrease.

Following a reduction in the U.S. government’s estimate of second-quarter economic growth to a level that remains robust, Wall Street’s key indicator, the S&P 500 index, registered a 0.4% increase on Wednesday.

Traders are optimistic that forthcoming data on employment and retail sales will persuade the Federal Reserve that inflationary pressures are manageable, eliminating the necessity for further interest rate hikes.

Official statistics revealed a 2% contraction in Japanese factory activity in July compared to the previous month. Concurrently, a survey of Chinese service sectors indicated a weakening of activity in July, albeit with ongoing expansion.

Rob Carnell from ING remarked in a report, “The situation could be more dire; however, these data points are unlikely to provide significant reassurance to the markets.”

During this period, the Shanghai Composite Index experienced a 0.5% decrease, closing at 3,122.37. Conversely, Tokyo’s Nikkei 225 saw a 0.6% increase, reaching 32,517.23. In Hong Kong, the Hang Seng index edged down by less than 0.1%, settling at 18,469.05.

Meanwhile, Seoul’s Kospi index recorded a 0.4% gain at 2,548.87, while Sydney’s S&P-ASX 200 index slightly dipped by less than 0.1% to reach 7,293.30. New Zealand and Jakarta both experienced declines, while Singapore’s market saw an increase.

A monthly gauge of Chinese service sectors declined to 51 in comparison to June’s 51.2 on a 100-point scale, where figures above 50 signify expanding activity. Simultaneously, a distinct manufacturing indicator improved to 49.7, yet it continued to reflect contraction in activity.

The Chinese economy experienced a decrease in growth, sliding to 0.8% in the preceding quarter for the three months ending in June, in contrast to the 2.2% recorded in the January-March quarter. Both exports and retail spending have contracted, contributing to this decline.

The most recent data implies that the largest economy in Asia is not firmly on a growth trajectory, as stated in a report by Stephen Innes from SPI Asset Management. He noted, “These statistics may not be adequately reassuring to the markets.”

On Wall Street, the S&P 500 made progress on Wednesday, reaching 4,514.87. Although it has receded from its peak earlier in the year in July, it remains 17.6% higher for the initial eight months of 2023.

The Dow Jones Industrial Average experienced a marginal increase of 0.1% to reach 34,890.24. Concurrently, the Nasdaq saw a gain of 0.5% to achieve 14,019.31. This index has appreciated by nearly 34% throughout the year.

Leading the gains were technology stocks, with Apple seeing a rise of 1.9%, and Palo Alto Networks experiencing a 1.7% increase. However, HP faced a setback, losing 6.6% as a result of a trimmed profit forecast.

The U.S. government revised its estimate of second-quarter economic growth to an annual rate of 2.1% from the previous 2.4%. Despite this adjustment, the growth still surpassed the 2% recorded during the first quarter.

Official data released on Tuesday indicates a cooling trend, adding another potential factor that supports the Federal Reserve’s inclination to maintain stable interest rates, which are currently at their highest point in 22 years, in order to counteract inflation.

During its recent meeting, the central bank opted to keep rates unchanged, a decision that investors anticipate will persist in its upcoming September meeting.

Traders are hopeful that the Federal Reserve can effectively execute a “soft landing,” achieving a balance where they can rein in inflation without pushing the U.S. economy into a recession.

Scheduled for Thursday, the government is set to disclose an update on inflation alongside a report on personal consumption and expenditures, denoted as PCE. This particular inflation metric holds paramount importance for the Federal Reserve. Notably, it eased to 3% in July, down from last year’s peak of 7%.

Subsequently, Friday will see the culmination of a substantial week of updates with the government’s monthly employment report for August.

In the sphere of energy markets, the standard U.S. crude oil experienced a minor decline of 8 cents, resting at $81.55 per barrel during electronic trading on the New York Mercantile Exchange. The preceding day had witnessed an increase of 47 cents, bringing the price to $81.63. Simultaneously, Brent crude, the international oil trading reference, saw a decrease of 10 cents, settling at $85.14 per barrel in London. Contrastingly, the prior session had observed a gain of 37 cents, pushing the price to $85.86.

The dollar exhibited a decline against the yen, shifting from Wednesday’s 146.20 yen to 145.84 yen. Meanwhile, the euro demonstrated a marginal decrease, edging down from $1.0923 to $1.0923.

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