Asian stocks rebounded following last week’s rout, as investors digested mixed China manufacturing data amid ongoing brokerage probes.
Mainland China stocks posted modest gains on Tuesday, with the Shanghai Composite Index adding 0.3%. The benchmark gauge had plunged more than 5% last Thursday after major Chinese brokerages announced they were being investigated by regulators for securities violations.
The CSI 300 Index, which tracks A-shares listed on the Shanghai and Shenzhen stock exchanges, closed up 0.7%.
Hong Kong’s Hang Seng Index rallied 386 points or 1.8%, with 46 of its 50 members ending higher.
Japanese stocks also rallied on Tuesday, with the Nikkei 225 Index closing up 265 points or 1.3% at 20,012.40. Tuesday marked the first time since August that the Nikkei closed above 20,000.
In economic data news, an official manufacturing report confirmed that China’s manufacturing sector fell to its lowest level in more than three years, fueling fears about a more protracted slowdown for the world’s second-largest economy.
China’s official manufacturing PMI fell to 49.6 in November from 49.8 in October, the National Bureau of Statistics reported on Tuesday. That was below estimates calling for 49.9.
A private sector equivalent – the Caixin China manufacturing PMI – showed that China’s manufacturing sector contracted for ninth consecutive month in November, albeit at a slower rate than in October. The final November PMI reading of 48.6 came in above October’s 48.3.
A PMI reading below 50 signifies contraction in manufacturing activity.
Weak China data weighed on crude prices on Tuesday. The West Texas Intermediate (WTI) benchmark for US crude fell 31 cents or 0.7% to $41.34 a barrel on the New York Mercantile Exchange. International contract Brent crude also declined 41 cents or 0.9% to $44.20 a barrel on ICE Futures Europe.
As the world’s largest energy consumer, China’s economic downturn has been partly to blame for the collapse in oil prices. Crude prices are forecast to remain low for the foreseeable future, as supply continues to outstrip demand.
Meanwhile, precious metals rallied across the board on Tuesday, as the US dollar declined ahead of a spate of economic data. Gold prices rallied 0.2%, but remained near six-year lows. Silver futures and industrial metals also rallied.
The US dollar index, a weighted average of the greenback against a basket of six rivals, fell 0.3% to 99.90.
Based out of Toronto, Canada, Husni Sam Borji is senior macroeconomics analysts who contributes regularly to TradersDNA, where he examines the global financial markets. Husni Sam has authored dozens of government reports and industry whitepapers, as well as thousands of financial articles. Husni Sam holds a BA from the University of Windsor and a Master’s degree in Economic Public Policy from McMaster University.
His expertise includes macroeconomics, fundamental analysis, industry research and global political economy.