Asian stocks struggled on Thursday after data out from China showed the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell for the first time in 11 months as demand weakened and lower factory prices reduced profits. The Caixin PMI fell to 49.6, lower than forecasts of 50.1. The 50-point mark is the turning point between growth and contraction on a monthly basis, and the fall below 50 marks the third month of consecutive declines for China’s PMI. Production rose at the slowest pace since June 2016 and coincided with sharp employment cuts, the steepest in eight months, as employers tried to control their costs.
Chinese shares dropped by as much as 0.4 percent after the news, with the Shanghai Composite down 0.51 percent and the Shenzhen Composite down nearly 1 percent. South Korea’s Kospi fell -0.2 percent. Japan’s Nikkei 225 index gained 1 percent after data showed recurring first quarter corporate profits were the highest on record.
The on-shore yuan traded at 6.7894 against the dollar at midday in Hong Kong, levels not seen since November 2016. The currency was trading at 6.8090 just before the markets opened, the strongest level in seven months.
Currency Market Movements
The sterling struggled during Thursday’s Asian session as traders became increasingly concerned that Prime Minister Theresa May could lose Parliamentary control on the upcoming June 8 election. The sterling was down 0.21 percent to $1.286 as of 6:50 a.m. GMT. The euro traded mostly flat on Thursday, hovering around $1.124.