By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Asian stock markets fell Thursday as weak economic data from the U.S. and China added to worries about global growth, hitting shares of commodity producers especially hard.
Shares in Shanghai and Hong Kong dropped as investors got their first chance to react to the official Chinese manufacturing Purchasing Managers’ Index for April, released Wednesday. Both markets remained weak after HSBC, which releases a rival PMI measure, revised lower its April reading on activity at Chinese factories on Thursday.
HSBC’s chief economist for China, Qu Hongbin, said the drop in April PMI to 50.4 from 51.6 in March “confirmed a fragile growth recovery of the Chinese economy.” The weak conditions could affect the labor market, likely inviting “more policy responses in coming months,” he added.
The Shanghai Composite Index /zigman2/quotes/210598030/delayed HK:HSI -2.19% fell 0.2% as the market reopened for the first time this week after the Labor Day holidays, while the Hang Seng Index dipped 0.3% in Hong Kong, which was also closed Wednesday.
Elsewhere in the region, Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -0.28% dipped 0.8% for its fourth straight trading day of losses, while Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -1.78% shed 0.7%, and South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +0.92% fell 0.3%.
The drop came after U.S. data on Wednesday, showing weak jobs addition by private employers and tepid growth in manufacturing, resulted in sharp losses on Wall Street.
The Federal Open Market Committee, meanwhile, said it would continue buying $85 billion in bonds each month but added it may raise or cut the program, subject to economic conditions.
“With the Federal Reserve reaffirming their dedication to current stimulus measures ... economic data will likely have greater weight on equity market performance. So if the current theme of negative data surprises continues, we could see equity markets catch up with the recent selloff in commodity markets,” said Rivkin Securities global analyst Tim Radford.
Fed signals flexibility on stimulus
The Federal Reserve says it will adjust its bond buying purchases depending on jobs and inflation.
Resource stocks came under selling pressure as the Chinese and U.S. data sparked fresh worries about demand from the world’s two largest economies.
In Sydney, mining heavyweight BHP Billiton Ltd. /zigman2/quotes/201448516/delayed AU:BHP -0.99% /zigman2/quotes/208108397/composite BHP -2.23% dropped 1.2%, and Fortescue Metals Group Ltd. /zigman2/quotes/202351558/delayed AU:FMG -3.04% /zigman2/quotes/204116626/delayed FSUMF +0.50% skidded 4.3%.
Jiangxi Copper Co. /zigman2/quotes/204256025/delayed JIXAY -9.21% /zigman2/quotes/201334192/delayed CN:600362 -0.48% /zigman2/quotes/201668148/delayed HK:358 -1.68% fell 2.9%, and PetroChina Co. /zigman2/quotes/206980083/delayed CN:601857 -1.52% /zigman2/quotes/204979431/delayed HK:857 -1.76% /zigman2/quotes/205108732/composite PTR -1.81% dropped 0.6% in Shanghai; in Hong Kong trade, they lost 1.2% and 2.1%, respectively.
Several steel makers also lost ground across the region on concerns about demand, with JFE Holdings Inc. /zigman2/quotes/203557603/delayed JFEEF -20.14% /zigman2/quotes/204336633/delayed JP:5411 -0.88% slumping 4.8%, and Kobe Steel Ltd. /zigman2/quotes/207391157/delayed JP:5406 -0.62% dropping 3.1% in Tokyo.
Similarly, Wuhan Iron & Steel Co. retreated 1.9% in Shanghai and Hyundai Steel Co. /zigman2/quotes/203290957/delayed KR:004020 +0.89% lost 1.7% in Seoul.
The weak tone in Asia was also reflective of caution ahead of the Friday’s U.S. nonfarm payrolls data and the European Central Bank monetary-policy meeting later Thursday, where the central bank was expected to cut interest rates amid weakening economic indicators.
Over in Tokyo, trading volumes were modest ahead of a long weekend, with Japanese markets due to close on Friday and Monday.
Exporters were among the top decliners as the yen strengthened further against the U.S. dollar /zigman2/quotes/210561789/realtime/sampled USDJPY +0.1204% .
Among them, Nissan Motor Co. /zigman2/quotes/208298710/delayed JP:7201 -3.91% /zigman2/quotes/207656007/delayed NSANY -7.61% lost 2%, and Bridgestone /zigman2/quotes/205589013/delayed JP:5108 -1.61% /zigman2/quotes/204111038/delayed BRDCY -5.24% shed 2.2%.
On the upside, Sharp Corp. /zigman2/quotes/200401218/delayed SHCAY -7.62% jumped 5% after a Nikkei newspaper report that some banks were considering extending a 100-billion-yen ($1.01 billion) credit facility to the electronics company ahead of an upcoming bond redemption.
However, Fitch Ratings said in a statement it was maintaining a negative rating watch on the company, reflecting “growing risks to Sharp’s liquidity position in the short-term, due to its upcoming debt maturities and limited access to the capital markets.”
Panasonic Corp. /zigman2/quotes/201785256/delayed JP:6752 -2.02% /zigman2/quotes/202333059/delayed PCRFY -2.80% gained 0.3% after a separate Nikkei report that the company had unloaded shares worth about ¥100 billion in firms such as Toyota Motor Corp. Toyota /zigman2/quotes/203803129/delayed JP:7203 -0.24% /zigman2/quotes/200537742/composite TM -2.70% stock lost 1.1%.
Minutes of the Bank of Japan’s last meeting in April, released earlier on Thursday, showed the central bank’s board members felt it was necessary for the bank to “enter a new phase of monetary easing.”
Shares of Lenovo Group Ltd. /zigman2/quotes/205368244/delayed HK:992 -2.88% /zigman2/quotes/204000062/delayed LNVGY -4.27% dropped 2.7% in Hong Kong after the company’s talks to buy a part of International Business Machines Corp.’s /zigman2/quotes/203856914/composite IBM -5.22% server business broke down due to differences over price.
Back in Sydney, Macquarie Group Ltd. /zigman2/quotes/206727308/delayed AU:MQG -2.18% /zigman2/quotes/204353811/delayed MCQEF +23.13% rose 1% after The Australian reported the financial company was aiming for control of a portfolio of nine investment schemes managed by collapsed logging firm Gunns.