Asian stock markets are predominantly trading lower on Monday, despite the broadly positive signals from Wall Street on Friday. This downward trend is attributed to disappointing factory activity data from China, which declined for the fourth consecutive month in August. However, there is lingering optimism about interest rates following a report showing that US consumer prices increased as expected in July, while the annual rate of price growth remained unchanged. Asian markets had mostly closed higher last Friday.
The US data has reinforced expectations for a Federal Reserve interest rate cut this month, although there is uncertainty about the pace of further rate cuts, contributing to market volatility. According to CME Group's FedWatch Tool, there is a 69.5 percent probability of a quarter-point rate cut next month and a 30.5 percent likelihood of a half-point rate cut.
The Australian stock market is modestly lower on Monday, reversing previous session gains, despite positive cues from Wall Street. The benchmark S&P/ASX 200 index is dropping below the 8,100.00 level, primarily due to weaknesses in mining stocks amid falling metal prices. Additionally, traders are reacting to data showing continued contraction in the domestic manufacturing sector in August.
The S&P/ASX 200 Index is down 17.90 points or 0.22 percent to 8,074.00, having earlier hit a low of 8,041.30. The broader All Ordinaries Index is losing 22.90 points or 0.28 percent to 8,293.80. Australian stocks had closed notably higher on Friday.
In the mining sector, Rio Tinto is down almost 1 percent, BHP Group is edging lower by 0.4 percent, while Mineral Resources is up more than 1 percent and Fortescue Metals is inching up 0.3 percent. Oil stocks are mostly trading higher, with Santos marginally up 0.2 percent and Woodside Energy gaining nearly 1 percent, although Origin Energy is down 0.3 percent and Beach Energy remains flat.
Tech stocks show mixed results, with Xero and WiseTech Global edging up 0.2 to 0.3 percent, whereas Block and Zip are both losing about 1 percent each, and Appen is surging by 5.5 percent.
Gold miners are largely lower: Evolution Mining is down over 2 percent, Resolute Mining is declining nearly 4 percent, Northern Star Resources is down almost 2 percent, and Gold Road Resources is slipping by more than 1 percent. Newmont, however, is up 0.4 percent.
Among the major banks, Commonwealth Bank, National Australia Bank, ANZ Banking Group, and Westpac are each inching up 0.2 to 0.4 percent.
In other news, shares in Imugene are skyrocketing over 27 percent following promising trial results for its cancer treatment in 10 patients. Shares in REA Group have been halted just before trading began, as the online real estate platform considers a bid for UK-listed Rightmove. Meanwhile, shares in Star Entertainment have been suspended for failing to publish its full-year results last week.
Economic indicators show that Australia's manufacturing sector continued to contract in August, although at a slower pace, with the latest PMI from Judo Bank at 48.5, up from 47.5 in July but still below the 50 mark that separates expansion from contraction.
The Australian Bureau of Statistics reported that building permits in Australia rose seasonally adjusted by 10.4 percent in July to 14,797, surpassing forecasts of a 2.4 percent increase. Permits for private houses rose by 0.6 percent to 9,252, and those for private dwellings excluding houses jumped 32.1 percent to 5,234. Total residential building value increased by 9.0 percent to A$8.49 billion, while non-residential building value rose by 3.2 percent to A$4.69 billion.
Additionally, company gross operating profits in Australia declined by a seasonally adjusted 5.3 percent in the second quarter of 2024, missing expectations of a 0.6 percent decline. Profits fell by 3.9 percent year-over-year. Manufacturing sales rose 0.3 percent quarter-over-quarter and 0.7 percent year-over-year. Inventories edged up 0.1 percent quarter-over-quarter and 1.5 percent year-over-year, while wages increased by 0.7 percent quarter-over-quarter and 5.3 percent year-over-year.
In the currency market, the Australian dollar is trading at $0.676 on Monday.On Monday, the Japanese stock market edged higher, bolstered by gains from the previous session. The benchmark Nikkei 225 Index reached 38,709.88 by the close of the morning session, increasing by 62.13 points or 0.16 percent, despite dipping to 38,670.66 earlier. This follows a notably positive finish on Friday.
Leading the charge were market heavyweights, with SoftBank Group and Fast Retailing each inching up nearly 1 percent. In the automotive sector, Honda rose almost 2 percent, whereas Toyota increased by more than 1 percent.
Technology stocks saw significant momentum: Screen Holdings gained almost 1 percent, Advantest advanced over 3 percent, and Tokyo Electron added more than 1 percent. Within the banking sector, Sumitomo Mitsui Financial inched up by 0.5 percent, while Mitsubishi UFJ Financial and Mizuho Financial each gained over 1 percent.
Top exporters also showed strength, as Canon and Mitsubishi Electric each climbed by nearly 1 percent, while Panasonic surged over 2 percent. Sony, however, declined by 1.5 percent.
High performers included IHI and Kawasaki Heavy Industries, each rising almost 5 percent, and Yaskawa Electric and Tokyo Electric Power, each advancing nearly 4 percent. Credit Saison, Murata Manufacturing, TDK, and Daiwa Securities each gained over 3 percent, while Takashimaya, Sumco, Mitsubishi Chemical Group, and NEC advanced close to 3 percent.
Conversely, Sumitomo Pharma plummeted nearly 7 percent and Chugai Pharmaceutical fell almost 5 percent. Toto and ZOZO slid over 3 percent each, and Nitori Holdings along with Sapporo Holdings lost nearly 3 percent each.
On the economic front, Japan's manufacturing sector continued to contract in August, though at a slower pace. According to Jibun Bank, the manufacturing PMI rose to 49.8 from July's 49.1, still below the threshold of 50 that separates expansion from contraction.
In the currency market, the U.S. dollar traded in the lower 146 yen range on Monday.
Elsewhere in Asia, Hong Kong dropped by 1.6 percent, while New Zealand, China, Malaysia, and Taiwan saw declines ranging from 0.1 to 0.6 percent. Singapore and Indonesia each gained 0.5 percent, and South Korea remained relatively unchanged.
U.S. stocks fluctuated but eventually rallied on Friday, with the Dow closing higher for the fifth time in six sessions, hitting a new record. The Nasdaq surged 197.19 points (1.1 percent) to 17,713.62, the S&P 500 gained 56.44 points (1.0 percent) to 5,648.40, and the Dow climbed 228.03 points (0.6 percent) to 41,563.08.
In Europe, key markets ended slightly lower, with the French CAC 40 Index dipping 0.1 percent, and the U.K.'s FTSE 100 Index along with the German DAX Index closing marginally below their previous marks.
Crude oil prices declined significantly on Friday following reports that OPEC will proceed with an scheduled output hike in October. West Texas Intermediate crude for October delivery dropped by $2.36 or 3.1 percent, settling at $73.55 a barrel.
