Asia Markets

Mainland China markets shine despite lackluster Caixin services PMI

Key Points
  • China Caixin services PMI came in at its lowest levels in 21 months
  • Mainland markets rallied after resuming trade following a week-long holiday
  • U.S. September nonfarm payrolls declined by 33,000
  • The Turkish lira fell against the dollar after the U.S. suspended some visa services

Most Asia markets closed higher on Monday as investors in Asia digested the release of China Caixin services PMI.

The S&P/ASX 200 rose 0.5 percent, or 28.625 points, to close at 5,739.3 on broad-based gains across most sub-indexes. Major miners gave up early gains to close lower while gold stocks held onto significant gains: Alacer Gold closed up 3.14 percent and Kingsgate advanced 3.7 percent. The energy sub-index underperformed the broader market, closing 0.2 percent below the flat line.

With Japan, South Korea and Taiwan markets closed for public holidays, investors turned their attention to China as mainland markets resumed trade after the week-long "Golden Week" holiday.

Markets on the mainland rallied, shrugging off lackluster services data released earlier in the session. The climbed 0.77 percent, or 25.9310 points, to close at 3,374.8741 and the Shenzhen Composite surged 1.304 percent, or 25.9379 points, to finish the session at 2,014.4295. The blue-chip CSI 300 rose 1.19 percent to touch its highest levels since 2015, according to Reuters data.

Hong Kong's was off 0.47 percent by 3:14 p.m. HK/SIN.

The Caixin services purchasing managers' index showed non-manufacturing activity in China expanded at its slowest levels in almost two years in September, Reuters said. The Caixin/Markit PMI stood at 50.6 last month, compared to the 52.7 figure seen in August.

Meanwhile, the Caixin composite PMI stood at 51.4 in September, below the 52.4 in August.

Still, both of the PMI remained above the 50-mark, indicating expansion. Economic growth could slow down in the third quarter, but China remained "on track" to meet the government's full-year target, UBS Senior China Economist Donna Kwok told CNBC's "Squawk Box."

The Australian dollar, often sensitive to Chinese economic data, slid following the softer PMI print. The Aussie dollar dipped as low as $0.7763 following the release after trading as high as $0.7782 earlier. The currency last traded at $0.7756 by 3:14 p.m. HK/SIN.

Labor market data from the U.S. showed a decline of 33,000 jobs in September, well below the 90,000 increase forecast by economists in a Reuters poll. The weaker-than-expected statistic was attributed to distortion from the impact of Hurricanes Harvey and Irma.

Despite the softer headline number, average hourly wages rose 0.5 percent last month while unemployment fell to its lowest level in more than 16 years.

Stocks stateside closed narrowly mixed on Friday following the data release. The Dow Jones industrial average finished the session just 0.01 percent, or 1.72 points, below the flat line at 22,773.67 while the Nasdaq added 0.07 percent to close at 6,590.18.

Meanwhile, the greenback edged up, standing at 93.809 at 3:08 p.m. HK/SIN. The U.S. currency had originally edged up following the reported increase in wages last week before sliding on news that North Korea was readying a new long-range missile test, Reuters said Friday, quoting a Russian lawmaker.

Against the Japanese currency, the greenback was mostly flat at 112.62 yen.

Still, the dollar could "retain the upper hand" if risk aversion abated in the 48 hours ahead, said OCBC Bank strategist Emmanuel Ng in a note.

In economic news, several Federal Reserve officials indicated openness to an interest rate hike in December. Dallas Fed President Robert Kaplan said Friday he was "open minded" about another rate hike by year-end, while New York Fed President William Dudley said he thought it was "appropriate" for the central bank to continue removing accommodation.

Market expectations for at least one more interest rate hike by December now stand at 93.1 percent, according to the CME Group's FedWatch tool on Monday.

Australia's Mantra Group was among market movers in the session. Shares of the hotel operator spiked after the company confirmed in a statement that it had received a takeover offer from Accor. Mantra Group stock closed up 16.41 percent.

Meanwhile, Chinese auto stocks posted robust gains as trade resumed after a week-long holiday. Dongfeng Auto closed up 4.63 percent, Faw Car jumped 9.16 percent and Changan Auto rose 3.39 percent by the end of the session.

Hong Kong-listed casino stocks, however, performed worse despite the "Golden Week" holiday lasting one day more than usual. Wynn Macau declined 3.41 percent, Galaxy Entertainment fell 2.89 percent and Sands China was down 2.78 percent by 3:10 p.m. HK/SIN.

In corporate news, shares of Singapore's City Developments were up 1.38 percent at 3:01 p.m. HK/SIN after a trading halt was lifted. The developer — which indirectly owns around 65.2 percent of Millennium & Copthorne Hotels — made an offer to acquire M&C shares it did not presently own.

In other currencies, the Turkish lira clawed back some losses after tumbling on diplomatic tensions between the country and the U.S. The greenback gained some 4 percent against the Turkish currency earlier in the session and last fetched 3.7006 lira at 3:08 p.m. HK/SIN.

On the energy front, oil prices edged up after tumbling on Friday when oversupply worries brought an end to a recent rally. Brent crude rose 0.02 percent to trade at $55.63 a barrel and U.S. West Texas Intermediate crude advanced 0.49 percent to trade at $49.53.