By Daniel Inman
Australian stocks moved higher on Thursday, and Shanghai pared
most of its early losses, after a measure of Chinese factory hit a
seven-month high.
The initial October reading for China's manufacturing activity
came out at 50.9, compared to a final reading of 50.2 in September.
The score was a seven-month high, above the 50 mark that separates
expansion and contraction in factory activity.
The report was one of the first pieces of economic data to come
out of the region's largest economy in the third quarter, arriving
less than a week after figures showed that Chinese growth picked up
from a dip in the second quarter.
HSBC's flash PMI measure of manufacturing has led to some sharp
market moves this year, as it pointed to a slowdown in factory
activity earlier in the summer before showing signs of improvement
in recent months.
Australia's S&P/ASX 200 rose 0.5%, South Korea's Kospi added
0.1% and the Shanghai Composite erased most of its earlier losses
to trade down just 0.1%.
In currency markets, the Australian dollar (AUDUSD) picked up
slightly after the data was released, last trading at 96.56 U.S.
cents, compared with 96.21 U.S. cents late Wednesday in New York.
The yen (USDJPY) gave up some of the strength it showed earlier in
the session and was last trading at Yen97.40 to the dollar.
Thursday's upbeat reading however did little to offset fears
over the Chinese economy after interbank rates jumped higher in the
previous session, reviving concerns over a liquidity crunch that
China experienced earlier in the year.
Hong Kong's Hang Seng Index dropped on Thursday 0.5%, and
Japan's Nikkei Average fell 0.4%.
The dollar trading below Yen98 put some pressure on exporters in
Tokyo: Kyocera Corp. (KYO) lost 1.3%, and Toyota Motor Corp. (TM)
was 0.6% lower.
There was also some weakness among companies that produce
industrial machinery in Japan after Caterpillar shares (CAT)
plunged 6.1% overnight as the firm cut its full-year earnings
forecast. This had a knock-on effect on its peers in Japan, where
Hitachi Construction Machinery (HTCMF) lost 1.7%, and Komatsu
(KMTUF) also dropped 2.5%.
Also in Japan, Hitachi (HIT) jumped 7.1% higher after the
company more than doubled its net profit outlook for the fiscal
half-year ended Sept. 30, due to strength in areas such as
electric-power systems.
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