BEIJING, China – Asian stock markets were muted Monday after unexpected weakness in Chinese manufacturing tempered enthusiasm for Japan’s surprise central bank stimulus.
KEEPING SCORE: China’s benchmark Shanghai Composite Index gained 0.1 per cent to 2,423.27 while Hong Kong’s Hang Seng declined 0.1 per cent to 23,973.99. Tokyo was closed for a holiday but the dollar was trading at a seven-year high against the yen in the wake of the Bank of Japan’s announcement Friday. Seoul shed 0.4 per cent to 1,955.85. Taiwan and Singapore rose while Jakarta and Sydney declined.
CHINA FACTORIES: A gauge of Chinese manufacturing released by a government-sanctioned industry group declined by 0.3 points to 50.8 on a 100-point scale on which numbers above 50 show an expansion. The market consensus had called for an increase to 51.2 points. The unexpected weakness fed concern growth in the world’s second-largest economy will decline further.
JAPAN STIMULUS: Japan’s central bank delighted investors with its announcement Friday it will step up bond purchases in hopes of stimulating spending in the world’s third-largest economy. The Bank of Japan said it will increase its purchases by 10 trillion yen to 20 trillion yen ($91 billion to $181 billion) to about 80 trillion yen ($725 billion) a year. That boosted sentiment after the U.S. Federal Reserve’s decision last week to end its stimulus through its quantitative easing strategy of massive bond purchases.
THE QUOTE: “The moves from the BOJ were huge and the fact the central bank worked in such cohesion with the government shows why being long Japanese equities is the right trade for now,” said Chris Weston, chief market strategist at IG in Melbourne. “It’s not often you get such a clear sign that authorities want a higher equity market to generate monetary velocity, but that’s exactly what we are seeing.”
WALL STREET: U.S. market benchmarks ended October at record highs, rebounding from their worse slump in two years. On Friday, the Dow rose 221.11 points, or 1.3 per cent, to 17,195.42. The S&P 500 rose 12.35 points, or 0.6 per cent, to 1,994.65. The Nasdaq composite rose 16.91 points, or 0.4 per cent, to 4,566.14.
ENERGY: Benchmark U.S. crude was down 21 cents to $80.33 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 58 cents on Friday to $80.54. Brent crude, used to price international oils, was off 12 cents at $85.74.
CURRENCIES: The dollar rose to 112.74 yen from 112.33 yen late Friday. The euro fell to $1.2482 from $1.2524.