Asia Markets

Asian stocks mixed as manufacturing activity in China shrinks again

Key Points
  • Stocks in major Asian stock markets closed mixed on Thursday.
  • China's manufacturing activity in January contracted for the second consecutive month.
  • Following its decision to keep interest rates steady after a two-day meeting, the Federal Open Market Committee said in a statement: "The Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate."

Major stocks in Asia closed mixed on Thursday on the back of official data from China showing that the Chinese economy contracted for the second month in a row in January.

The mainland Chinese markets ended their trading day mixed. The Shanghai composite gained around 0.35 percent to 2,584.57 and the Shenzhen component rose 0.117 percent to 7,479.22. The Shenzhen composite, however, slipped 0.698 percent to 1,274.74.

Meanwhile, Hong Kong's Hang Seng index gained about 1 percent, in its final hour of trading.

The market movements came after China's official data showed that manufacturing activity in January contracted for the second consecutive month.

The manufacturing Purchasing Managers' Index (PMI) for January was 49.5, according to the Chinese National Bureau of Statistics — higher than the 49.4 reported in the previous month.

Elsewhere in Asia, Japan's Nikkei 225 rose 1.06 percent to close at 20,773.49 while the Topix saw gains of 1.08 percent to finish its trading day at 1,567.49, as shares of Japanese conglomerate Softbank Group jumped 4.77 percent.

South Korea's Kospi, however, saw slight losses to close at 2,204.85. Shares of industry heavyweight Samsung Electronics slipped 0.54 percent after the company warned of weaker earnings in 2019 following a 29 percent plunge in its fourth quarter operating profit.

In Australia, the slipped 0.37 percent to close at 5,864.70. Shares of oil companies advanced as the energy subindex rose 1.7 percent following Wednesday's gain in oil prices. Santos was higher by 2.69 percent, Woodside Petroleum rose 0.82 percent. Beach Energy soared 5.13 percent after the company raised its production guidance for fiscal year 2019.

Fed says it will be 'patient' on interest rates

Overnight on Wall Street, stocks were sent higher on the back of a signal from the Federal Reserve on a change in its monetary policy path.

Following its decision to keep interest rates steady after a two-day meeting, the Federal Open Market Committee said in a statement: "The Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate." The statement also dropped the word "gradual."

"The (Federal Open Market Committee) statement suggests that the next move in official interest rates could be up or down — a significant departure from previous signalling of further gradual rate hikes," analysts from Commonwealth Bank of Australia said in a note.

"Our view remains that the strength of the US economy supports moving the Fed Funds target rate a little further into the neutral‑range of around 2.5%‑3.5% over the course of 2019. But the risk is less tightening, rather than more tightening. We also continue to expect the start of a monetary policy easing cycle in 2021," they said.

Meanwhile, high level negotiations between the U.S. and China are ongoing in Washington, with both sides aiming to strike a comprehensive deal amid an ongoing trade war.

"I think a deal will be done, it might not be done this week, it might even be done, quite frankly, by March 2nd. But at the end of the day, as we've seen in the past, the real issue will not be about the deal, it will be about the enforcement of that deal," Curtis Chin, an Asia fellow at think tank the Milken Institute, told CNBC's "Squawk Box" on Thursday.

"In the past it's been China promises, you know, U.S. accepts. But whether or not China really delivers, that's really (what) we're all focused on right now," Chin said.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 95.272 after seeing an earlier session high of 95.379.

The Japanese yen, widely viewed as a safe-haven currency, traded at 108.79 against the dollar after seeing lows above 109.6 yesterday. The Australian dollar was at $0.7266 after rising from levels above $0.714 in the previous session.

Oil prices continued to see gains during Asian afternoon trade on Thursday. The international benchmark Brent crude futures contract gained 0.75 percent to $62.11 per barrel. The U.S. crude futures contract rose 0.57 percent to $54.54 per barrel.

— CNBC's Fred Imbert and Yen Nee Lee contributed to this report.

Correction: This article was updated to reflect that the U.S. dollar index saw lows above 95.2 yesterday.