Asian Stocks Dip on Weak PMIs, China Rebounds as State Steps In
Asian Stocks Extend Losses on Weak Business Activity Readings
Most Asian stocks experienced further declines on Tuesday as weak business activity readings from Japan and Australia weighed on market sentiment. However, Chinese markets managed to rebound from pre-pandemic lows, thanks to a state-run fund stepping in to purchase equities.
Concerns over Israel-Hamas War Limit Major Gains
Despite some progress made in diplomatic missions to deescalate the Israel-Hamas conflict, missile attacks between the two regions continued, keeping market gains limited. The looming possibility of an Israeli ground assault on Gaza added to the unease.
Treasury Yields Ease, Offering Support to Stock Markets
Easing Treasury yields, which have retreated from recent multi-year peaks, provided some support to stock markets. However, the technology sector remained under pressure.
Weak Japan and Australia PMIs Dent Sentiment
Japan’s stock market fell 0.4%, while Australia’s slid 1% following disappointing purchasing managers’ index (PMI) data. The PMI data indicated a contraction in Japan’s economy and a deterioration in Australia’s economic growth.
Chinese Stocks Rebound with State Fund’s Support
China’s stock market index rose 0.4%, recovering from its lowest level since January 2019. The central Huijin Investment Co, a Chinese sovereign fund, announced its purchase of exchange-traded funds (ETFs) to support local stock markets. This move signaled support for Chinese stocks and helped alleviate concerns over the property market and sluggish economic recovery.
Technology Sector Faces Pressure from High Yields and Earnings Anticipation
Technology-heavy indexes were the worst performers of the day due to continued pressure from high yields. Traders remained wary of the sector as they anticipated key U.S. tech earnings releases from Microsoft Corporation, Alphabet, Meta Platforms, Intel Corporation, and Amazon later in the week. The sector’s performance throughout the third quarter was closely watched to determine if steady earnings growth continued.
Market Performances in Hong Kong, South Korea, and Taiwan
Hong Kong’s stock market index shed 0.5% but managed to recover from an 11-month low earlier in the session. South Korea’s market fell 0.2%, while Taiwan shares were rattled by reports of a tax probe into Apple Inc supplier Foxconn Technology Co Ltd.
Overall, Asian markets faced mixed performances as weak PMIs in Japan and Australia dampened sentiment. However, the rebound of Chinese stocks with the support of a state-run fund provided some relief. Technology stocks remained under pressure due to high yields and anticipation of key earnings reports. Market participants closely monitored geopolitical tensions and economic indicators for further direction.
