Asian stocks uneven as China data, Japan policy weighed

SEOUL, South Korea – Chinese stocks fell Monday after a weak manufacturing report while Japan extended gains following its central bank’s introduction of a negative interest rate policy to boost lending and spur growth. Other markets were mixed.

KEEPING SCORE: Japan’s Nikkei 225 rose 2.1 per cent to 17,883.66 and South Korea’s Kospi added 0.3 per cent to 1,916.78. Hong Kong’s Hang Seng fell 0.6 per cent to 19,567.54 and the Shanghai Composite in mainland China lost 1.5 per cent to 2,696.99. Australia’s S&P/ASX 200 gained 0.8 per cent to 5,043.60. Stocks in Taiwan and Southeast Asia were lower.

CHINA MANUFACTURING: An index based on a survey of factory purchasing managers fell to 49.4 in January, its lowest in more than three years, in the latest sign of weakness for the world’s No. 2 economy. January’s reading was down from December’s 49.7 on a 100-point scale on which numbers below 50 indicate contraction. Separately, the private Caixin/Markit purchasing managers’ index showed improvement but was weak overall.

THE QUOTE: Investors will expect more stimulus from Beijing as the latest data showed that China’s manufacturing is “in a state of further deterioration,” said Mizuho Bank in a daily commentary. “Markets could be betting on more co-ordinated and forceful stimulus from Beijing too now that there is a certain policy stimulus momentum established.”

CENTRAL BANKS: Analysts said after Japan’s central bank introduced a negative interest rate policy on Friday, central banks in other countries may add to stimulus or be more cautious about tightening policy. “The Bank of Japan’s move sets a more dovish tone for major central banks around the world,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “At the margin, it will increase the incentive for the ECB to add stimulus as it seeks to keep its currency relatively weak. Similarly the Fed and the Bank England will be a little more cautious about lifting rates.”

WALL STREET: U.S. stock markets posted their biggest gains in about five months on Friday though ended January with losses. The Dow Jones industrial average surged 2.5 per cent to 16,466.30. The Standard & Poor’s 500 rose 2.5 per cent to 1,940.24. The Nasdaq composite index jumped 2.4 per cent to 4,613.95.

ENERGY: Benchmark U.S. oil was down 48 cents to $33.15 a barrel in electronic trading on the New York Mercantile Exchange. It finished Friday at $33.62 a barrel, up 40 cents, or 1.2 per cent. Brent crude, a benchmark for international oils, fell 61 cents to $35.38 a barrel in London.

CURRENCIES: The dollar rose to 121.33 yen from 121.12 yen on Friday. The euro strengthened to $1.0848 from $1.0831.