By Kenan Machado
Equity markets across the Asia-Pacific region pared early gains Thursday morning after disappointing economic data out of China, as investors awaited a rate decision from the Bank of England.
China’s business activity slowed further last month, falling short of expectations, which will likely set off a fresh discussion on the deceleration of the country’s economy after a strong first half.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +1.77% and the Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP -0.34% both pared gains after the release; both were recently flat. In Australia, the S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.03% was off 0.2% after being flat for much of early trading, despite an upbeat domestic jobs report.
In China, value-added industrial output, a rough proxy of economic growth, rose 6% from a year earlier in August, slowing from July’s 6.4% increase. Meanwhile, a key gauge of construction activity was up 7.8% for the year through August, slower than an 8.3% increase through July.
“It was a surprise to us that the growth rate in fixed-asset investments came down so speedily, mostly due to the weakness in construction sector,” said ING’s Greater China Economist Iris Pang.
The slowdown in retail sales could be due to tepid jewelry sales, Pang said. Retail sales growth slowed to 10.1% from 10.4% in July.
Meanwhile, a stronger-than-expected jobs report in of Australia sent the Australian dollar 0.3% higher against the U.S. dollar, after the pair hovered around session lows for most of the morning session. The Australian dollar later pared some gains.
“Equity markets were mostly muffled as the risk rally appears to lose momentum,” said Chang Wei Liang, an analyst at Mizuho Bank in Singapore.
Still, strength in crude oil prices overnight lifted energy-sector stocks across the region. Oil prices jumped to one-month highs in the U.S. after the International Energy Agency said global crude production fell in August for the first time since April. It also raised raised its 2017 oil demand estimate slightly.
Among key energy shares, Japan’s Inpex /zigman2/quotes/206689846/delayed JP:1605 +1.13% and Japan Petroleum /zigman2/quotes/201212147/delayed JP:1662 +1.96% added 1.4% each. Crude prices held on to gains in Asia trade, though they were slightly lower.
In Australia, oil producer Santos /zigman2/quotes/207349564/delayed AU:STO -0.96% was up 1.2%, while Woodside Petroleum /zigman2/quotes/203437212/delayed AU:WPL -0.25% and Oil Search /zigman2/quotes/204702973/delayed AU:OSH -1.34% logged near-1% gains each.
Those gains were offset by weakness in major commodity stocks, tracking declines in metals prices. Among those, BHP Billiton /zigman2/quotes/201448516/delayed AU:BHP +0.74% was down 1.6% and Rio Tinto /zigman2/quotes/200083756/delayed AU:RIO -0.57% was off 1.4%.