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Asian Stocks Mixed, China PMI Contraction Casts Cloud

David Cottle

DailyFX.com -

Talking Points:

  • Asian stocks were mixed with a surprise fall in a Chinese manufacturing gauge weighing on many
  • The Nikkei managed gains, however, as business capex pleased investors
  • But the Australian Dollar was clobbered by those Chinese numbers

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There were more mixed fortunes for Asia/Pacific stocks Thursday although many bourses took a knock from some disappointing economic news out of China. The Caixin survey of smaller, private firms in the world’s second largest economy notched up its first contraction for twelve months in May. Modest expansion had been expected.

The rest of the day’s Asia/Pacific economic data were something of a roller coaster. Australian retail sales soared above forecasts, but Japanese capital spending numbers dented the Yen with a much more modest beat- speaking to prospects for improved global demand rather than any improvement in Japanese consumption.

The Nikkei 225 ended the session up 1.1% after those strong capex data, but mainland Chinese stocks unsurprisingly fell. Australia’s ASX was steady into the close, up 0.2%..

The Australian Dollar was the major currency casualty of that disappointing China data. The Aussie often acts as the markets’ liquid China-trade proxy and lost about 0.5% against the US Dollar. China’s Yuan rallied again adding to gains made on Wednesday, reportedly on investor views that its home central bank is now less inclined to let it weaken against the US Dollar.The greenback edged up but endured a torpid session overall

Gold prices held steady, having hit five-week highs the session before, although the perceived prospect of higher US interest rates this months was reportedly capping gains. Crude oil prices got a lift on news that the US could pull out of the Paris global climate change accord and after data showed that US stockpiles had fallen by more than expected. Both the US benchmark and international Brent added about 40 cents/barrel.

Italian Gross Domestic Product Data and the UK manufacturing PMI. From the US will come the employment snapshot from Automated Data Processing, weekly jobless-claim numbers and the manufacturing survey from the Institute for Supply Management. More news of US oil-inventory levels are also coming, as is Canada’s manufacturing PMI.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX

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