MUMBAI (MarketWatch) — Most Asian markets fell, with sentiment hit by further evidence of cooling in Chinese manufacturing activity, while the Federal Reserve disappointed investors hoping for new major stimulus measures.
A weaker yen, meanwhile, helped lift Japanese stocks.
China’s Shanghai Composite /zigman2/quotes/206600939/delayed CN:000001 -3.42% dropped 1.4% and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.15% fell 1.3%. South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.93% lost 0.8% and Australia’s S&P/ASX 200 index /zigman2/quotes/210598100/delayed AU:XJO +0.04% declined 1.1%.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.13% , however, gained 0.8%.
Stocks mostly extended losses after an initial reading of HSBC’s China manufacturing Purchasing Managers’ Index showed activity slowing in June from the previous month. Read more on HSBC’s China manufacturing PMI.
HSBC China chief economist Hongbin Qu said the sharp fall in prices and moderation of new orders pointed to weak domestic demand.
“With external headwinds remaining strong, exports are likely to decelerate in the coming months,” he said in a statement.
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Commodity-tied firms were notable decliners following the data. In Australia, iron-ore producer Fortescue Metals Group Ltd. /zigman2/quotes/202351558/delayed AU:FMG -0.40% /zigman2/quotes/207124211/delayed FSUGY -1.70% traded down 2.4%, and copper producer PanAust Ltd. fell 3.1%, while in Hong Kong, China Coal Energy Co. /zigman2/quotes/201486584/delayed HK:1898 -1.04% /zigman2/quotes/205321671/delayed CCOZY -3.07% gave up 3.5%.
Energy firms were also mainly weaker across Asia, as Nymex crude-oil futures /zigman2/quotes/209725365/delayed CLN22 +0.26% traded below $81 a barrel in the electronic session.
Sydney-listed Santos Ltd. /zigman2/quotes/207349564/delayed AU:STO +0.23% sank 4.4%, and Cnooc Ltd. /zigman2/quotes/203421416/delayed HK:883 +0.31% /zigman2/quotes/204964401/composite CEO -1.27% tumbled 3.2% in Hong Kong.
Chinese financials also came under selling pressured. Bank of Communications Co. /zigman2/quotes/203442771/delayed HK:3328 +0.19% /zigman2/quotes/202128064/delayed BCMXY +4.07% dropped 1.9% in Hong Kong, while in Shanghai, New China Life Insurance Co. /zigman2/quotes/204761736/delayed CN:601336 -2.93% slumped 3.3% and Haitong Securities Co. /zigman2/quotes/203443667/delayed CN:600837 -4.15% lost 3.8%.
Property firms were hit hard, as Agile Property Holdings Ltd. /zigman2/quotes/200754284/delayed AGPYY +24.79% /zigman2/quotes/210448079/delayed HK:3383 0.00% fell 4.6%, China Resources Land Ltd. /zigman2/quotes/202417326/delayed HK:1109 -0.73% sank 5.3%, while Evergrande Real Estate Group’s /zigman2/quotes/208605330/delayed HK:3333 -0.53% shares plunged 11.4%.
Losses for exporters weighed in Seoul. Samsung Electronics Co. /zigman2/quotes/203012110/delayed SSNGY 0.00% dropped 2%, and Kia Motors Corp. /zigman2/quotes/206019389/delayed KR:000270 +1.88% lost 1.5%.
The subdued session followed losses for most U.S. stock indexes on Wednesday after the Federal Reserve extended its “Operation Twist” program to push down long-end yields, but disheartened some investors by failing to issue more far-reaching measures. The Fed said it would expand its program to replace short-term bonds with longer-term debt by $267 billion through the end of 2012. See report on Fed bond buys.
The central bank also cut its growth forecasts. Read more on Fed’s outlook cut.
Mitul Kotecha, Credit Agricole strategist, said the Fed’s decision “left markets with a taste of disappointment.”
“Nonetheless, any downside to risk assets was limited by the potential for more quantitative easing somewhere down the line,” Kotecha said.
But while much of the region’s markets moved lower, a weaker Japanese yen supported major Tokyo-listed exporters.
Toshiba Corp. /zigman2/quotes/205628942/delayed JP:6502 +0.54% /zigman2/quotes/204149068/delayed TOSYY -0.02% put on 1.4%, Kyocera Corp. /zigman2/quotes/204880749/delayed JP:6971 +0.27% /zigman2/quotes/205094593/delayed KYOCF +3.45% climbed 2.6%, and Panasonic Corp. /zigman2/quotes/201785256/delayed JP:6752 +0.76% gained 2.8%, as the euro moved above ¥100, and with the dollar also rising against the yen overnight.
Japanese car makers also extended recent gains, with Nissan Motor Co. /zigman2/quotes/208298710/delayed JP:7201 -0.87% /zigman2/quotes/207656007/delayed NSANY -1.59% up 1.9%, and Toyota Motor Corp. /zigman2/quotes/203803129/delayed JP:7203 +0.46% /zigman2/quotes/200537742/composite TM -0.21% adding 1.2%.
Shares of Honda Motor Co. /zigman2/quotes/200490352/delayed JP:7267 -1.55% /zigman2/quotes/207173990/composite HMC -1.90% climbed 3.5% after Credit Suisse raised its price target on the shares, one day after a ratings upgrade from Nomura.
Recently battered shares of Renesas Electronics Corp. /zigman2/quotes/203872935/delayed JP:6723 +1.00% /zigman2/quotes/201351352/delayed RNECY +0.52% added 3.1% after a Dow Jones Newswires report that Hitachi Ltd. /zigman2/quotes/203839937/delayed JP:6501 +1.00% /zigman2/quotes/203416411/delayed HTHIF -0.58% , NEC Corp. /zigman2/quotes/205173342/delayed JP:6701 +0.20% /zigman2/quotes/203814274/delayed NIPNF 0.00% and Mitsubishi Electric Corp. /zigman2/quotes/207150000/delayed JP:6503 +0.13% planned to provide Renesas with ¥50 billion ($630 million) in aid.
Mitsubishi Electric advanced 1.3%, Hitachi slipped 0.6% and NEC shares fell 0.8%.