Asian markets mixed as Japan’s Nikkei lags behind

Asian shares clinched slender gains overnight as improved manufacturing data from China, Japan and the United States augured well for global growth, despite a disappointing result from the euro zone. Though moves were modest as markets slipped into something of a summer lull, MSCI’s broadest index of Asia-Pacific shares outside Japan managed to gain 0.3 per cent.

Japan's Nikkei lagged by losing 0.36 per cent, but South Korea outperformed with a rise of almost 1 per cent, led by Samsung Electronics and Hyundai Motor.

“Market heavyweights closely follow global economic recovery, and the manufacturing surveys in the US and China have provided positive signals,” said Hyundai Securities market analyst Bae Sung-young. The performance of manufacturing surveys (PMI) tend to be reliable, and timely, leading indicators of output trends and are closely watched by economists. So there was relief that readings from the United States, China and Japan all rose strongly in the month. The US PMI was a particularly pleasant surprise as it climbed to a four-year peak of 57.5. That helped offset an unexpected dip in Markit’s euro zone PMI to 52.8 in June from May’s 53.5. David Hensley, an economist at JPMorgan, said the PMI’s taken as a whole pointed to a quickening in global industrial output, perhaps to as much as a 5 per cent annualised pace.

“Emerging Asia lies at the centre of global manufacturing, so any acceleration in global activity normally would be confirmed there,” he added. “The continued recovery in China’s manufacturing PMI is a positive sign, both outright and because China’s survey typically is aligned with the broader EM complex. The trend in official data for EM Asia ex China remains murky, however.”

The disappointing euro zone PMI’s also weighed on the euro, while the better Chinese data boosted commodity-exposed currencies including the Australian dollar. The euro was flat at $1.3592 while the Aussie was up at $0.9424 having touched a three-month peak overnight. Against the yen, the common currency stood at 138.45 , while the dollar fetched 101.87. That left the dollar index a shade firmer at 80.302, though well within 80.000-81.000 range seen since May.

Reuters