Asia close mixed after data shows January fall in China factory activity

Yoshikazu Tsuno | AFP | Getty Images

Asia markets closed mixed on Monday, with major indexes in Australia, Japan and South Korea extending gains after the Bank of Japan's (BOJ) surprise move on Friday to adopt negative rates sent stocks higher from Tokyo to New York.

In Japan, the Nikkei 225 closed up 346.93 points, or 1.98 percent, at 17,865.23 while the Topix gained 30.60 points, or 2.14 percent, to 1,462.67. Across the Korean Strait, the Kospi finished 12.76 points, or 0.67 percent, higher at 1,924.82.

Down Under, the ASX 200 retraced some gains to close up 38.07 points, or 0.76 percent, at 5,043.60; earlier, the index was up as much as 1.17 percent. The energy sector, which rose as much as 2 percent in early trade, pared gains to close up 0.49 percent, while the financials sector finished up 0.39 percent.

Evan Lucas, market strategist at spreadbetter IG, wrote in a morning note that the BOJ's move was "a net positive for risk, net positive for international trade and increases in fund flows in Asia. All are seen as a macro positive."

Markets in Greater China were in negative territory with Hong Kong's Hang Seng index closing down 87.61 points, or 0.45 percent, at 19,595.50. On the mainland, Shanghai composite lost 48.34 points, or 1.77 percent, to close down at 2,689.25. The index is down some 24 percent since the start of the year. The Shenzhen composite also shed 17.52 points, or 1.03 percent, to close down at 1,671.90.

Some of the biggest losers on the Shanghai index were China Shipbuilding, down 5.17 percent, Baotou Steel, down 4.73 percent, and China Railway Group, lower by 3.77 percent.

Earlier, an official survey showed China's factory sector contracted for the sixth straight month. The official manufacturing purchasing manager's index (PMI) came in at 49.4 in January, marginally missing a Reuters estimate for 49.6. A reading below 50 indicates a contraction in activities.

Meanwhile, the Caixin manufacturing PMI data was at 48.4 in January, marginally up from the previous reading of 48.2 a month earlier and slightly beating market expectations. The closely-watched gauge of nationwide manufacturing activity focuses on smaller and medium-sized companies, filling a niche that isn't covered by the official data.

HSBC's Greater China economists, Jing Li and Julia Wang, wrote in a note that both domestic demand and input prices saw smaller contractions, which suggest a degree of stabilization in the world's second-largest economy. But they warned, "risks to growth likely remained on the downside with overseas demand falling and employment still weakening."

"Today's data suggest that deflationary pressures still persist in the manufacturing sector and will continue to weigh on overall economic growth," the wrote.

Oil prices decline in Asian hours

Oil prices were down in Asian trading hours, with U.S. crude futures lower by 1.99 percent to $32.95 a barrel, while globally traded Brent was down 2 percent at $35.27.

Last week, U.S. crude gained 10.81 percent for the week and Brent rose 13.9 percent after there was speculation over a possible deal between OPEC and non-OPEC producers to cut production in the face global oversupply.

Energy plays traded mixed on Monday, with shares of Santos closing down 3.48 percent. Woodside Petroleum gave up gains of over 1 percent to finish lower by 0.14 percent, and Oil Search was finished up 0.77 percent.

Japan's Inpex gave up gains to close flat and Japan Petroleum gained 1.62 percent. South Korea's S-Oil was up 4.09 percent.

Chinese energy plays were mostly down. Hong Kong-listed shares of CNOOC down 3.17 percent and mainland shares of Petrochina closed down 2.82 percent.

Japanese financials down over 5%

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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Banking and financial stocks across the region were mixed.

In Japan, banking stocks were mostly down, with major players extending losses from Friday after the BOJ's announcement. A negative interest rate will likely see their profits dented. Mitsubishi UFJ was down 5.46 percent, SMFG fell 7.61 percent, and Mizuho Financial was down 5.88 percent.

Down Under, major banks closed mixed, with ANZ being the biggest gainer, with its shares up 1.70 percent.

Resources producers also finished the session mixed with Rio Tinto down 0.41 percent while shares of BHP Billiton and Fortescue were 0.65 and 3.18 percent lower.

Also ahead, investors in Australian markets will watch the Reserve Bank of Australia's (RBA) meeting on Tuesday, where experts expect the central bank to leave interest rates on hold at 2 percent.

Shane Oliver, head of investment strategy and chief economist at AMP Capital, said a note on Friday, "December quarter inflation was low but in line with RBA expectations, recent Australian economic data has been okay and it's doubtful that the latest bout of financial and commodity market turmoil has been enough to move the RBA out of its "chilled out" state."

He added, "However, the latest round of worries about global growth coming at a time when domestic growth remains sluggish, national income is being hit by the continuing slump in commodity prices, the housing sector is losing momentum and inflation is low are likely to see the RBA strengthen its easing bias."

He added he expects the RBA to cut the cash rate again in the months ahead.

Sony shares soar 12%

Shares of electronics maker Sony closed up 12.41 percent after the company reported its fiscal third-quarter earnings. Reports said net profit rose 33.5 percent on-year to 120.1 billion yen ($999.8 million), beating market expectations.

Japanese exporters such as Toyota, Nissan and Canon finished higher, between 1.44 and 2.71 percent, as the dollar-yen pair traded higher at 121.25. A weaker yen is a positive for exporters as it increases their overseas profits when converted into local currency.

Reuters reported this morning that Toyota would halt all production at its Japan assembly plants from February 8 to 13 due to a steel shortage, following an explosion at a steel plant operated by one of its affiliates. Production is reportedly said to resume on February 15.

Sharp shares retraced early losses of as much as near 2.9 percent to trade up 2.88 percent. The Japanese electronics maker currently has two competing investment offers; one from Taiwan's Hon Hai Precision Industry, better known as Foxconn, and one from a Japanese state-backed fund.

Shares of troubled air bag manufacturer Takata were down 9.98 percent, after reports said last week its CEO had no plans to stand down as of now. It had earlier been reported that the CEO would offer his resignation in a sign the company took responsibility for triggering a huge vehicle recall.

Elsewhere, South Korean blue chip stocks closed mixed with shares of Samsung Electronics gaining 1.13 percent, Kepco up 1.14 percent, and Hyundai Motor down by 0.38 percent.

Last week on Wall Street

Stateside, major indexes finished higher on Friday. The Dow Jones industrial average rose 396.66 points, or 2.47 percent, to 16,466.30.

The S&P 500 closed up 46.88 points, or 2.48 percent, at 1,940.24, while the Nasdaq composite gained 107.28 points, or 2.38 percent, to 4,613.95.

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