Market participants took a back foot after Factory activity in China shrank for the third straight month in February, as output activities contracted more quickly than the previous month due to the weeklong Lunar New Year holiday. China's official manufacturing gauge fell to a three-year low, highlighting deepening cracks in an economy facing persistently weak demand at home and abroad.
The China's official manufacturing purchasing managers index (PMI), which gives a snapshot of operating conditions in the manufacturing sector, dipped further to 49.2 in February from 49.5 in the previous month, according to data released Thursday by the National Bureau of Statistics (NBS). The reading marks its lowest since February 2016. A reading of 50 separates expansion from contraction.
Growth in China's services industry slowed in February after rebounding for two straight months, an official survey showed on Thursday. The official non-manufacturing Purchasing Managers' Index (PMI) fell to 54.3 in February from 54.7 in January, but still well above the 50-point mark that separates growth from contraction. The composite PMI, which covers both manufacturing and services activity, edged down to 52.4, from January's 53.2. The fast-growing services sector accounts for more than half of China's economy, and has helped buffer the impact of slowing manufacturing.
Sentiments was partly dampened as US Trade Representative Robert Lighthizer dialed back expectations for a sweeping trade deal with China, while traders attention switched to Michael Cohen, the president's former attorney, who said that President Donald Trump committed crimes while in office, in a hotly contested House hearing. Meanwhile, Federal Reserve Chair Jerome Powell told lawmakers that he'll soon announce a plan to stop shrinking the central bank's $4 trillion balance sheet.
Health care shares were up, with hospital operator Ramsay Health Care leading the pack by adding 5.6% after announcing it was on track to meet its full-year guidance.
The consumer staples sector declined, with ex-dividend Woolworths down 1.4% and rival Coles down 1.7%.
Energy stocks were up, after oil futures jumped more than 2% overnight. Santos, Woodside Petroleum, Oil Search, Origin Energy and Beach Energy were still up between 0.1% and 1%
Shares of major materials and resources were down. Mining giant BHP was down 0.4%, Rio Tinto was up 1.5% and ex-dividend Fortescue Metals was down 3.9%.
The banking sector was down, with major banks ANZ, NAB, Commonwealth and Westpac were lower in a range of 0.1% to 0.6%.
On the economic front, the Australian Bureau of Statistics said that private capital expenditure in Australia was up a seasonally adjusted 2.0% on quarter in the fourth quarter of 2018. That exceeded expectations for an increase of 1.0% following the 0.5% decline in the three months prior.
The Reserve Bank of Australia said that private sector credit in Australia was up 0.2% on month in January, unchanged from the previous month, but shy of expectations for an increase of 0.3%. On a yearly basis, credit climbed 4.3% - unchanged and in line with forecasts.
CURRENCY: The Australian dollar was lower against the U.S. dollar on Thursday. The local currency spiked after the release of quarter private capital expenditure data, which exceeded market expectations, but slumped again shortly after. The Australian dollar was quoted at $0.7147, down from $0.7187 on Wednesday.
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