Asia Markets

Asian stocks fall on China worries, lower energy prices

Asian stocks stumbled on Monday, as falling energy prices and disappointing manufacturing data out of China ignited "risk-off" sentiment.

The final reading for Caixin China purchasing managers' index (PMI) for July came in at 47.8, lower than the preliminary reading of 48.2 and marking a two-year low.

The figure also comes in below the official PMI figure released by the statistics bureau over the weekend. Growth at big manufacturing firms unexpectedly stalled last month with the official PMI standing 50.0 in July, compared with the previous month's 50.2 and below a Reuters' forecast of 50.2, as demand at home and abroad weakened.

A preliminary Caixin/Markit survey released earlier this month showed activity at smaller factories contracted by the most in 15 months. The index fell to 48.2 in July, coming in well below the 49.7 forecast from a Reuters poll and the 50-mark separating growth from contraction.

Wall Street finished mildly lower on Friday, the final day of trade for July, as investors digested missing in energy corporate earnings and soft U.S. data that could push an initial rate hike further out. According to government data, the second-quarter employment cost index recorded its slowest quarterly pace of growth on record.

Mainland markets down

China's Shanghai Composite index remained firmly in the red on Monday, closing down 1.1 percen, on the back of renewed concerns over the world's second-largest economy.

Meanwhile, market regulators suspended a trading account of U.S.-based hedge fund Citadel, the fund said Monday, as authorities in the mainland battle to prop up China's stumbling stock market.

In Shanghai, heavyweight PetroChina led losses with a slump of 4.6 percent, while Sinopec dropped 3.7 percent.

Among the country's other indexes, the CSI300 index recouped losses to inch up 0.3 percent and the smaller Shenzhen Composite eased 2.7 percent. Hong Kong's Hang Seng index tracked its mainland peers to move down 1 percent.

Shares of HSBC outperformed the Hong Kong market after reporting a 2 percent year-on-year rise in adjusted pre-tax profit to $13 billion for the first half. The Hong Kong-listed stock reversed a negative open to advance 2 percent.

Weak external demand hurting China PMI: StanChart
Weak external demand hurting China PMI: StanChart

Nikkei sheds 0.2%

Japan's Nikkei 225 index drifted lower as softer oil prices and worries over the state of China's economy dampened risk appetite.

JX Holdings sagged 4.4 percent, while Showa Shell and Inpex lost 0.8 and 2 percent, respectively, as oil extended losses to multi-month lows on Monday.

Stocks with China exposure were battered following the disappointing PMI; construction equipment makers Komatsu and Hitachi Construction Machinery eased 1.3 and 2.1 percent, respectively, while Nisshin Steel erased nearly 10 percent.

ASX slips 0.4%

Australia's index snapped a three-day winning streak, with investors dumping resources shares on the back of China-related worries.

Oil counters took the hardest-hit; Oil Search receded 2.8 percent, while Santos and Woodside Petroleum sagged 0.8 and 1.1 percent, respectively.

BHP Billiton and Rio Tinto shaved off 1 and 1.3 percent, respectively, while gold producers such as Newcrest Mining and Kingsgate Consolidated ended down more than 1 percent each.

Kospi eases 1.1%

South Korea's Kospi index widened losses to finish at a more than three-week closing low, as worries over the country's largest trading partner — China — dented sentiment.

Carmakers Hyundai Motor and Kia Motors closed down more than 3 percent each, with the latter taking a hit from data which showed a 10.7 percent slump in its July sales.

Energy counters were also among the day's biggest losers, with SK Innovation and S-Oil plunging 6.5 and 8 percent, respectively.

More downside risks for Malaysian ringgit: ANZ
More downside risks for Malaysian ringgit: ANZ

KLCI flat

While Malaysia's benchmark FTSE Bursa Malaysia KLCI managed to avoid the hit that other regional bourses suffered on Monday, the slumped to its lowest level since 1998 to trade at 3.8460 against the U.S. dollar.

Analysts attribute the decline in the currency to growing likelihood of a rise in U.S. interest rates, declining oil prices and recent political instability.

"The fact that the Federal Reserve is embarking on a rate hike and recent domestic political developments are reasons why the currency is under pressure," Khoon Goh, ANZ's senior FX strategist at ANZ, told CNBC.

"We also have Bank Negara Malaysia which tried to hold the currency earlier in July around the 3,880 level, using $5 billion of their FX reserves. This resulted in their reserves falling below the psychological $100 billion mark and now, that's starting to spook the market," he added.