Asia-Pacific markets decline; China's factory activity shrinks

This is CNBC's live blog covering Asia-Pacific markets.

An employee works at the Tokyo Stock Exchange in Tokyo, Japan, on Jan. 13, 2022.
Toru Hanai | Bloomberg | Getty Images

Shares in the Asia-Pacific fell sharply on Thursday as investors digest the results of a private survey on China's factory activity.

In Australia, the S&P/ASX 200 fell 2.02% to close at 6,845.60, while the Australian dollar weakened to $0.6827.

Japan's Nikkei 225 slipped 1.53% to 27,661.47, and the Topix index dropped 1.41% to 1,935.49. Hong Kong's Hang Seng index was 1.79% lower at 19,597.31, and the Hang Seng Tech index also fell 1.63%.

The Kospi in South Korea shed 2.28% to close at 2,415.61 and the Kosdaq lost 2.32% to 788.32.

In mainland China, the Shanghai Composite struggled for direction and closed 0.54% lower at 3,184.98, while the Shenzhen Component was down 0.88% at 11,712.39.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 1.76%.

China's Caixin/Markit manufacturing Purchasing Managers' Index for August released Thursday showed the sector slipping into contraction this month.

This comes after official manufacturing PMI data released on Wednesday showed that factory activity shrank amid a recent rise in Covid infections, and the nation facing the worst heatwaves in decades.

Overnight in the U.S., major stock indexes rose earlier in the session, but closed lower for a fourth straight day.

The Dow Jones Industrial Average shed 280.44 points, or nearly 0.9%, to 31,510.43. The S&P 500 slipped roughly 0.8% to end the day at 3,955, and the Nasdaq Composite declined about 0.6% to 11,816.20.

Asian chipmakers close lower on Nvidia news

Stocks of Asia's largest chipmakers fell after the U.S. government told Nvidia to restrict artificial intelligence chip sales in China, citing national security concerns.

Taiwan Semiconductor Manufacturing Company, the world's largest chip manufacturer, fell 2.87%.. Its South Korean rivals Samsung Electronics fell 2.18% while SK Hynix also slid 2.94%.

Sebastian Hou, senior investment analyst at Neuberger Berman, said the U.S. government's decision was significantly driven by political reasons.

"Our thinking is that the timing is interesting because we are headed to the U.S. mid-term elections and China is going to have political events at the end of this year," he told CNBC's "Capital Connection."

"I think it'll further accelerate the domestic development from China to try to catch up [with the U.S.], but the gap is still pretty wide," he said.

—Jihye Lee

Sri Lanka reaches $2.9 billion agreement with IMF

The International Monetary Fund announced that it has reached a preliminary deal with Sri Lankan authorities for a $2.9 billion loan to support the country's economy.

The four-year arrangement has been made under the IMF's Extended Fund Facility, which includes a longer repayment period and medium-term structural reforms.

The agreement's targets are "to restore macroeconomic stability and debt sustainability, while safeguarding financial stability, protecting the vulnerable, and stepping up structural reforms to address corruption vulnerabilities and unlock Sri Lanka's growth potential," the IMF said in the press release.

—Jihye Lee

South Korea posts record trade deficit in August

South Korea's trade data for the month of August showed a trade deficit of $9.5 billion.

The nation's exports saw an expansion of 6.6% from August last year to $56.7 billion, while imports jumped 28.2% to $66.2 billion in the same period, according to official data.

The growth rate for chips exports shrank for the first time in more than two years, the trade ministry said, citing weakened purchasing power and excessive supply.

The latest trade numbers for semiconductors reflect "recessionary pressures in the global economy," said Park Chong Hoon of Standard Chartered Bank, Korea, on CNBC's "Squawk Box Asia." "But the bigger story is whether China's economy will be coming back."

"Considering Korea's dependence on China, it could be an opportunity, but it could [also] be a burden for Korea's export growth," he said.

In August, South Korea's exports to the U.S. rose 13.7% to $8.8 billion, while exports to China dropped 5.4% to $13.1 billion, official data showed.

— Jihye Lee

Mining stocks in Australia slip, BHP declines almost 8%

Australian mining stocks were lower in Asia's morning trade, weighing down the broader index.

Fortescue Metals Group shares slipped 3.28%, while Rio Tinto shares were down 1.08%.

BHP plunged as much as 7.9% as the company traded ex-dividend — which means a stock purchased now will not be eligible for the next dividend payout.

Gold miners also plunged, with Evolution Mining falling 7.74% and Newcrest Mining declining 3.78%. Gold prices have softened as rising interest rates dampen demand for the non-yielding precious metal.

— Abigail Ng

CNBC Pro: Goldman Sachs says mutual funds have been on a tear this year. Here's what they're buying

"A greater share of mutual funds has outperformed their benchmarks in 2022 than in any year since 2009," according to Goldman Sachs.

What's driving the outperformance? And what are these funds buying?

Pro subscribers can read more here.

— Zavier Ong

Caixin PMI shows China's factory activity shrank in August

The results of a private survey showed China's factory activity contracted in August.

The Caixin/Markit manufacturing Purchasing Managers' Index came in at 49.5 for August, compared to 50.4 in July.

PMI readings are sequential and represent month-on-month expansion or contraction. The 50-point mark that separates growth from contraction.

China's official manufacturing PMI for August slightly beat expectations at 49.4.

— Abigail Ng

U.S. 2-year Treasury yield rises to 14-year high

U.S. Treasury yields rose further to 3.52% in Asia's morning trade, the highest since November 2007.

The yield on the short-term 2-year Treasury note reached similar levels on Tuesday, when it hit 3.497%.

The yield on the benchmark 10-year Treasury note also rose to 3.22%, while the yield on the 30-year Treasury bond was at 3.3%. 

Yields move inversely to prices, and a basis point is equal to 0.01%.

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—Jihye Lee

Japanese yen inches closer to 140, levels not seen since 1998

The Japanese yen weakened sharply against the U.S. dollar early in Asia, reaching as high as 139.58 as it inches toward the 140 level.

The currency last tested these levels in mid-1998, according to Eikon data.

"FOMC Chair Powell and BoJ Governor Kuroda's reinforcement of their respective monetary policy stances last Friday gave USD/JPY another push towards the closely watched 140 handle," Carol Kong of the Commonwealth Bank of Australia wrote in a Thursday note.

"For USD/JPY to reach new highs, we will likely need to see a sharp sell‑off in US Treasuries or a significant deterioration in Japan's current account," she added.

The yen was last at 139.54 against the dollar.

— Abigail Ng

Jeffrey Gundlach calls yield curve inversions ‘reliable signals of economic trouble’

DoubleLine Capital CEO Jeffrey Gundlach urged investors to pay attention to the worsening recession signals from the bond market.

In a tweet Tuesday evening, Gundlach pointed to the yield curve inversion that he called "reliable signals of economic trouble," saying investors should "risk manage accordingly."

He previously noted that the inversion of the relationship between two-year and 10-year notes has telegraphed economic downturns four out of the past four times.

— Yun Li

'A game changer:' Goldman and others name global stocks set to benefit from the U.S. climate bill

The Biden administration passed the largest climate bill in history in August, giving a boost to a range of U.S.-listed clean energy stocks.

Goldman Sachs called the bill a "game changer" for the "clean" hydrogen economy — in the United States and beyond.

The investment bank and other analysts give their top, global stock picks and explain how they will benefit from the bill. Pro subscribers can read the more here.

— Weizhen Tan

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