By Daniel Inman
Asian stocks moved higher Thursday, as a strong reading on the state of Chinese factories lifted most markets outside of China.
The initial October reading for China’s manufacturing activity came out at 50.9, compared to a final reading of 50.2 in September. The score was a seven-month high, above the 50 mark that separates expansion and contraction in factory activity.
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The preliminary reading was among the first economic data on the region’s largest economy in the third quarter, coming less than a week after figures showed that Chinese growth picked up from a dip in the second quarter.
HSBC’s flash PMI measure of manufacturing has led to some sharp market moves this year, as it pointed to a slowdown in factory activity earlier in the summer before showing signs of improvement in recent months.
Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.05% added 0.3% to 5,372.90, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.27% ended up 0.5% at 2,046.69 and Japan’s Nikkei /zigman2/quotes/210597971/delayed JP:NIK -0.52% rose 0.4% to 14,486.41.
Thursday’s upbeat reading, however, did little to offset fears over the Chinese economy, as China’s interbank lending rate moved higher for a second day, reviving fears of a liquidity crunch as happened in June. In addition, data showing a further rise in house prices earlier in the week increased concerns that Beijing could step in to cool down the market.
Hong Kong’s Hang Seng index /zigman2/quotes/210598030/delayed HK:HSI +2.28% dropped 0.7% to 22,835.82, and the Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +1.55% lost 0.9% to 2,164.32.
Chinese banks recorded substantial losses in Hong Kong, with China Construction Bank /zigman2/quotes/208974133/delayed HK:939 +1.13% /zigman2/quotes/209484779/delayed CICHF +0.43% down 1.9%, and Industrial & Commercial Bank of China /zigman2/quotes/201401473/delayed HK:1398 +1.33% /zigman2/quotes/204265987/delayed IDCBF +5.22% down 1.3%
In currency markets, the Australian dollar /zigman2/quotes/210560947/realtime/sampled AUDUSD +0.4679% climbed as high as 96.71 cents after the Chinese data before easing back to 96.26 cents, little changed from 96.21 U.S. cents late Wednesday in New York.
The yen /zigman2/quotes/210561789/realtime/sampled USDJPY -0.0182% was steady late at ¥97.34 to the dollar.
Starbucks in China’s crosshairs
China’s state media is criticizing Starbucks for its prices in China. Photo: Getty Images
Japanese companies that produce industrial machinery were pulled lower after Caterpillar shares plunged 6.1% overnight following a cut in its full-year earnings forecast. Hitachi Construction Machinery /zigman2/quotes/205375504/delayed JP:6305 +0.04% /zigman2/quotes/202936726/delayed HTCMF 0.00% lost 1.4% and Komatsu /zigman2/quotes/204002437/delayed JP:6301 -0.59% /zigman2/quotes/206435044/delayed KMTUF -2.18% dropped 2.1%.
Also in Japan, Hitachi /zigman2/quotes/203839937/delayed JP:6501 -1.15% /zigman2/quotes/203416411/delayed HTHIF -0.27% jumped 8.4% after the company more than doubled its net profit outlook for the fiscal half-year ended Sept. 30, due to strength in areas such as electric-power systems.