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 (SHE:CN:000001) dropped 1.4% and Hong Kong’s Hang Seng Index (HONG:HK:HSI) fell 1.3%. South Korea’s Kospi (KOREA:KR:180721) lost 0.8% and Australia’s S&P/ASX 200 index (S&P:AU:XJO) declined 1.1%.
Japan’s Nikkei Stock Average (NIKKEI:JP:NIK) , 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. (ASX:AU:FMG) (OTC:FSUGY) traded down 2.4%, and copper producer PanAust Ltd. fell 3.1%, while in Hong Kong, China Coal Energy Co. (HKG:HK:1898) (OTC:CCOZY) gave up 3.5%.
Energy firms were also mainly weaker across Asia, as Nymex crude-oil futures (NYM:CLN22) traded below $81 a barrel in the electronic session.
Sydney-listed Santos Ltd. (ASX:AU:STO) sank 4.4%, and Cnooc Ltd. (HKG:HK:883) (NYS:CEO) tumbled 3.2% in Hong Kong.
Chinese financials also came under selling pressured. Bank of Communications Co. (HKG:HK:3328) (OTC:BCMXY) dropped 1.9% in Hong Kong, while in Shanghai, New China Life Insurance Co. (SHG:CN:601336) slumped 3.3% and Haitong Securities Co. (SHG:CN:600837) lost 3.8%.
Property firms were hit hard, as Agile Property Holdings Ltd. (OTC:AGPYY) (HKG:HK:3383) fell 4.6%, China Resources Land Ltd. (HKG:HK:1109) sank 5.3%, while Evergrande Real Estate Group’s (HKG:HK:3333) shares plunged 11.4%.
Losses for exporters weighed in Seoul. Samsung Electronics Co. (OTC:SSNGY) dropped 2%, and Kia Motors Corp. (KRX:KR:000270) 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. (TKS:JP:6502) (OTC:TOSYY) put on 1.4%, Kyocera Corp. (TKS:JP:6971) (OTC:KYOCF) climbed 2.6%, and Panasonic Corp. (TKS:JP:6752) 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. (TKS:JP:7201) (OTC:NSANY) up 1.9%, and Toyota Motor Corp. (TKS:JP:7203) (NYS:TM) adding 1.2%.
Shares of Honda Motor Co. (TKS:JP:7267) (NYS:HMC) 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. (TKS:JP:6723) (OTC:RNECY) added 3.1% after a Dow Jones Newswires report that Hitachi Ltd. (TKS:JP:6501) (OTC:HTHIF) , NEC Corp. (TKS:JP:6701) (OTC:NIPNF) and Mitsubishi Electric Corp. (TKS:JP:6503) 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%.