Regional markets started the week under pressure after release of mixed PMI data from China, the world second largest economy. The HSBC Holdings Plc and Markit Economics has released its final version of Purchasing Managers' Index on Monday, showed China's manufacturing activity shrank more than initial predicted in May.
China's HSBC manufacturing PMI contracted to 49.2 in May, the lowest level since October 2012. The final result undershot the preliminary figure of 49.6, which was released on May 23 and also slower from final reading of 50.4 in April. These reports followed a similar survey by Official Federation of Logistics and Purchasing (CFLP) on weekend that showed China's official PMI ticked up slightly to 50.8 in May from 50.6 in April. Meanwhile, the CFLP said on Monday that domestic non-manufacturing PMI fell to 54.3 in May from 54.5 in April, reinforcing the view that the recovery in the world's second-largest economy is losing steam. A reading above 50 indicates activity in the sector is accelerating, while one below 50 indicates it is slowing.
Furthermore, loses in the regional bourses also due to winding-off of risk assets from retailers and funds ahead of several tier one economic data from the US that potentially signal the Fed actions towards tapering. The Federal Reserve is spending $85 billion a month on buying bonds to push down interest rates in hopes of spurring borrowing and spending.
The week will culminate with the ISM manufacturing conditions index (Monday) and the nonfarm payrolls report (Friday) for May. The Federal Reserve will also release its latest Beige Book report on the state of the economy Wednesday, which could provide a few clues as to how the Fed expects the recovery to continue over the rest of the year.
Central bank policy meetings would also due this week, with the Bank of England, the ECB and the Reserve Bank of Australia is all scheduled to convene.
In the Asia Pacific region, the Japanese stock market nosedived, dragging the Nikkei Stock Average 512.72 points, or 3.72%, lower to end the day at 13,261.82, its lowest close since April 18. The Nikkei was down 5.7% last week.
In Australia, the Sydney shares closed first trading session of new month mostly lower, with big tech, miners and Telstra led decliners. The benchmark S&P/ASX200 index ended the day at 4888.30, down by 38.30 points or 0.78%. The benchmark index shed 4.7% in May 2013, marking its worst decline in 12 months.
In China, Shanghai listed shares were mixed today, with the benchmark Shanghai Composite Index down by 0.06% to 2299.25, after Purchasing Managers' Index (PMI) data signaled manufacturing business contracted more than initially estimated in May 2013 and growth in the services sector cooled.
In Hong Kong, Volatility ruled the city stocks, with the benchmark indices ended slight lower after wiping out gains late afternoon. The loss tracked weakness in the Shanghai Composite and decline in the other Asian bourses after mixed Chinese PMI data. The benchmark Hang Seng Index last quoted at 22282.19, down by 109.97 points or 0.49% from prior day closure.
In India, the Indian share market closed at lowest level in a month after the factory output in May fell to the lowest level in 50 months. The S&P BSE Sensex lost 0.76%, or 149.82 points, to 19,610.48. The HSBC/ Markit India's Manufacturing Purchasing Managers' Index fell to 50.1 in May, the lowest reading since March 2009, down from reading of 51 in April, and tad above the level of 50 that signals growth.
Elsewhere, Indonesia's Jakarta Composite fell down 1.9%, Malaysia's KLSE Composite shed 0.16% Singapore's Strait Times index shed 0.61%, Taiwan's TAIEX dropped 0.65% and South Korea's KOSPI Composite sank 0.57%.
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