Asia Markets

Most Asia markets gain following expectation-topping China Caixin manufacturing PMI

Key Points
  • China Caixin manufacturing PMI for August topped expectations
  • Treasury Secretary Steven Mnuchin said a detailed tax plan had been prepared by the Trump administration
  • The dollar edged up after sliding overnight

Most indexes in Asia closed moderately higher on Friday as investors parsed through the release of manufacturing activity data from China. Traders also digested the release of uninspiring U.S. data overnight.

Japan's Nikkei 225 rose 0.23 percent, or 45.23 points, to close at 19,691.47.

Across the Korean strait, the Kospi gave up early gains to slide 0.23 percent to end at 2,357.69. The benchmark index finished the month of August lower after eight consecutive months of gains.

Down Under, the S&P/ASX 200 edged up after a private survey showed manufacturing activity in China expanded in August, with the health care sub-index and gold miners leading gains. The benchmark index added 0.18 percent, or 10.078 points, to finish the session at 5,724.6.

Hong Kong's was nearly flat, edging down 0.02 percent to 27,963.6 by 3:01 p.m. HK/SIN, after climbing above the 28,000 level earlier in the session. On Monday, the index had crossed the 28,000 mark for the first time since May 2015.

Mainland markets climbed after the Caixin PMI data release: On the mainland, the advanced 0.19 percent, or 6.4901 points, to close at 3,367.3004, and the Shenzhen Composite added 0.587 percent, or 11.4134 points, to end at 1,956.3525.

Markets in Singapore, Malaysia, Philippines and Indonesia were closed for a public holiday.

The Caixin China manufacturing PMI for August came in at a six-month high of 51.6, topping a Reuters analyst poll. The private survey had been expected to show a slight dip to 50.9 in August from 51.1 in July, according to a Reuters poll.

The better-than-expected Caixin manufacturing PMI came a day after official numbers also came in above expectations at 51.7, reflecting a rise in Chinese manufacturing activity in August. Official services PMI on Thursday had shown a decline to 53.4, compared with 54.5 seen last month.

The Australian dollar — often sensitive to Chinese economic data — got a boost from the PMI beat, climbing as high as $0.7956 after the release, but later gave up gains to trade at $0.7930 at 2:39 p.m. HK/SIN.

Major news from the U.S. included Treasury Secretary Steven Mnuchin saying that a "very detailed" tax plan had been prepared by President Donald Trump's administration. In the Thursday interview with CNBC, Mnuchin also said the plan had been introduced to Congress and will be shown to the public at the end of September.

Given how markets appeared to have priced out the Trump administration following through on reform proposals, progress on the tax front will likely be viewed positively, said ANZ Economist Daniel Gradwell in a note. Still, "markets seem to be taking a skeptical view for now," he noted.

Investors stateside also digested inflation and consumer spending figures released Thursday. Consumer spending rose 0.3 percent in July, below the 0.4 percent forecast, Reuters said. Meanwhile, the personal consumption expenditures price index rose 1.4 percent, compared with the previous year, below the 1.5 percent rise seen in June.

Major indexes on Wall Street rallied overnight, with the Dow Jones industrial average rising 0.25 percent, or 55.67 points, to close at 21,948.10.

The dollar index, which measures the greenback against a basket of currencies, edged up to 92.788 at 3:04 p.m. HK/SIN after falling as low as 92.561 overnight following the data releases. The currency's overnight slide also followed Mnuchin's comment that a softer dollar was better for the U.S. on the trade front. The dollar had earlier traded above the 93 handle on Thursday.

Against the yen, the greenback edged up in the afternoon to trade at 110.19 yen, above the 109.9 handle seen in the last session.

The dollar/yen pair is likely to remain in focus when U.S. August nonfarm payrolls are released during American hours, said IG Chief Market Strategist Chris Weston in a note.

In corporate news, Toshiba missed an Aug. 31 deadline to secure an agreement over the sale of its memory business, Reuters said Thursday. The company will reportedly continue talks with three parties over the deal. Toshiba shares closed up 1.63 percent.

Meanwhile, South Korea's Lotte will borrow $300 million to prop up Lotte Mart operations in China and pay off loans, Korea Herald reported Thursday. A number of Lotte stores in China have been closed due to supposed code violations after a rift developed between the two countries over the deployment of a U.S. anti-missile system.

Lotte Shopping shares closed down 5.25 percent, leading losses among other South Korean retail stocks: Lotte Himart closed 0.73 percent higher and Shinsegae declined 2.85 percent.

Other market movers included shares of property developer Sunac Holdings, which fell 2.34 percent by 2:42 p.m. HK/SIN. That came despite the property developer announcing Thursday that first-half net profit surged 1,683.4 percent. Sunac shares had risen more than 4 percent earlier in the session.

In a Friday briefing, the company said it will invest in additional Dalian Wanda projects, Reuters reported. Sunac had originally been part of a deal to buy properties from Dalian Wanda. The latter changed the terms of the deal after increased scrutiny, with Sunac eventually taking a stake in 13 tourism projects.

Gambling stocks were also on a tear: Wynn Macau surged 6.40 percent, SJM Holdings soared 4.69 percent and Galaxy Entertainment rose 3.87 percent by 2:45 p.m. HK/SIN. Casino revenues in Macau increased 20 percent to 22.7 billion patacas ($2.82 billion) in August despite being hit by two typhoons that month, Reuters reported.

On the energy front, the September U.S. gasoline contract settled up more than 13 percent overnight at $2.1399 a gallon as close to a quarter of U.S. refinery capacity stayed shuttered, Reuters said. The largest refinery in the U.S. could also be closed for up to two weeks due to floods after Tropical Storm Harvey, according to Reuters. The October contract was off 0.6 percent at $1.7686 a gallon.

Oil prices slid after settling almost 3 percent higher overnight. U.S. crude slipped 0.70 percent to trade at $46.90 a barrel and Brent crude shed 0.38 percent to trade at $52.66.

South Korean data released on Thursday also gave investors plenty to study. Although manufacturing activity contracted in August, the Nikkei/Markit PMI reading of 49.9 showed a move closer to the 50-mark that divides decline and growth, Reuters reported.

Meanwhile, August exports rose 17.4 percent, compared with a year earlier and annual inflation in the month rose to its highest levels in five years, Reuters said.

The South Korean won got a lift from the data deluge, trading at 1,121.75 won to the dollar at 2:43 p.m. HK/SIN, compared with levels around the 1,123 handle seen in the last session.

— CNBC's Huileng Tan contributed to this report.