Asian Markets Fall On Stalled Manufacturing, Japan's Jobless Rate Rises

Arjun Pandit
01 Jul, 2022
New York City

Stocks in Asia closed down after manufacturing activities stalled in the region and India imposed windfall tax on oil companies. 

The Nikkei 225 index declined 1.7% to 25,935.92, Shanghai Composite index fell 0.32% to 3,387.64, the Kospi average  decreased 1.17% to 2,305.42, and the Sensex index eased 0.2% to 52,907.93. 

Markets in Hong Kong were closed for a holiday.   

Mitsubishi Corp and Mitusi Corp fell more than 5% after Russia set up a corporation to take over the stake held by trading companies and Shell Plc in Sakhalin Energy Investment Company.  

Three companies and Shell own just below 50% stake in the natural gas development firm. 

The seizure of stake comes following the recent Western sanctions on Russian businesses, trade, and persons.  

 

Japan's Business Sentiment Worsens 

The Nikkei fell near a two-week low after the Bank of Japan[s tankan survey of large companies showed sentiment worsened in the three-month period to June. 

The sentiment index among large companies dropped to 9 from 14 in the previous survey for three months ending in March. 

The business executives estimated the yen to weaken to 131.65 against one dollar from the previous estimate of 128.20 in the March survey. 

 

Japan's Jobless Rate Rises

Japan's jobless rate increased unexpectedly to 2.6% in May from 2.5% in April, the Ministry of Internal Affairs said Friday. 

The unemployment rate increased for the first time in four months. 

On a seasonally adjusted basis, the total number of employed declined to 67.24 million, a fall of 140,000 from April the ministry added. 

On a seasonally adjusted basis, the total number of unemployed increased to 1.8 million, a rise of 40,000 from April. 

The number of new job seekers were unchanged at 460,000 in May from April and voluntary departures increased 8.2% in May to 790,000. 

 

China Factory Activities Expand 

The private survey in China showed manufacturing activities expanded for the first time in four months in June. 

The Caixin/Markit manufacturing Purchasing Managers' Index for June rose to 51.7 from 48.1 in May, according to an independent survey released Friday. 

With the easing of coronavirus restrictions and gradual opening of the economy, factory activities are picking up in the second largest economy of the world. 

 

China Home Sales Rebound in June 

Home sales in China also appear to be on the rebound in June according to the latest data release by China Real Estate Information Corp on Friday. 

Total home sales for the top 100 real estate developers increased 61.2% in June to 733 billion yuan or $109.4 billion, ahead of 5.6% rise in May. 

India's manufacturing activities expanded in June but growth slipped to a nine-month low on elevated price pressures. 

 

India's Manufacturing Growth Slows 

The S&P Global factory Purchasing Managers' Index fell to 53.9 in June from 54.6 in May. 

Any reading above 50 indicates expansion.

The manufacturing sector expanded for the 12th month in a row but the growth rate slipped to the weakest since September 2021. 

 

India Imposes Windfall Tax On Oil Companies 

India imposes windfall tax on domestic oil companies to sustain domestic fuel supply and raise about 67,000 crore rupees or about $9 billion. 

Stocks on Dalal Street traded lower after the central government imposed windfall tax on oil companies. 

Central government imposed a one-time export tax of 6 rupees a liter on petrol and jet fuel and 13 rupees a liter on diesel, announced the finance ministry on Friday.

The finance ministry's move eliminates the price differential between domestic and export markets and sustains the domestic fuel supply. 

Madhya Pradesh, Rajasthan and Gujarat were facing fuel shortages after private refineries preferred to export than meet the domestic demand. 

The Sensex declined 111.01 or 0.2% to 52,907.93 and the Nifty 50 index decreased 28.20 or 0.2% to 15,752.05.

 

South Korea's Trade Deficit Record High In First Half  

South Korea's exports in June rose 5.4% to a record high $57.73 billion on solid demand for chip and petroleum products. 

The export increased for the 20th month in a row but slowed to a single-digit after expanding double-digits for 15 months in a row. 

June imports rose 19.4% to $60.2 billion resulting in a trade deficit of $2.47 billion. 

Exports in the first half increased 15.6% to a record half-year high of $350.3 billion and imports advanced 26.2% to $360.6 billion on high energy and raw materials prices.