China's Factory Activities Shrank for the Fourth Month, Japan's Retail Sales and Industrial Output Advanced

Arjun Pandit
31 Jan, 2024
Mumbai

Markets in China were under pressure after tech stocks led another downward day after weaker-than-expected earnings from AMD and Alphabet.

However, the indexes in Japan advanced after the release of retail sales and industrial output data.

The Nikkei 225 average advanced 0.6% to 36,286.55, and tech stocks led the gainers in Tokyo trading.

Retail trade sales increased by 2.1% from a year ago to 15.5 trillion yen in December, the Ministry of Economy, Trade, and Industry said on Wednesday.

For the fourth quarter of 2023, retail sales advanced 3.8% year over year but fell 1.7% from the previous quarter to 42.989 trillion yen.

Full-year 2023 retail sales gained 5.6% to 162.996 trillion yen.

Preliminary industrial output in Japan rose a seasonally adjusted 1.8% from the previous month in December, the Ministry of Economy, Trade, and Industry said on Wednesday.

Industrial production was down 0.7% on an annual basis.

The powerful earthquake in the Noto Peninsula on New Year's Day had little impact on industrial production data.

However, the recent halt in production at the Daihatsu plant over rigged collision-safety tests is likely to negatively impact production in January, according to the ministry.

Industrial production is expected to drop 6.2% per month in January and gain 2.2% in February.

In stock trading, Tokyo Electron, Disco, Advantest, and Keyence dropped between 2% and 3% after AMD reported sharply lower-than-expected earnings.

Elsewhere in the region, the KOSPI index decreased 0.1% to 2,497.09 and the ASX 200 index added 1% to 7,680.70.

 

Crude Oil in Focus After Red Sea Attacks Disrupt Supply Routes

Crude oil traded higher in international markets in the hopes that demand growth will rebound in China after the government pledged more policy support to stabilize financial markets.

Middle East oil-producing nations are also offering larger discounts to refineries in India and China after the producers face difficulties in shipping through the troubled waters of the Red Sea.

Diesel exporters from India are forced to divert shipments away from Red Sea Lanes to routes along South Africa after growing attacks by the Yemen-based Houthi group on cargo ships in the Red Sea.

Freight costs have risen more than twofold and added two weeks to the shipping time to Europe from India, making imports from the U.S. more competitive. 

 

China Stocks Slide After Manufacturing Sector Extend Weakness

Stocks in China slipped after manufacturing sector remained in contraction and service sector showed an anemic growth.  

China Manufacturing PMI edged slightly higher to 49.2 in January from 49.0 in December, the National Bureau of Statistics reported Wednesday.

Factory activities shrank for the fourth month in a row, and  new orders, exports, and  employment declined in the month. 

The data for January and February months could be volatile because of the Lunar Year celebration, which falls  this year on February 10.  

China Service PMI rose to 50.7 in January from 50.4 in December, reaching a four-month high and the sector  expanded for  the thirteenth month in a row.  

The CSI 300 index decreased 0.3% to 3,235.45 and the Hang Seng Index dropped 1.3% to 15,508.52.

The Hang Seng index dropped 7.6% in the month, the worst monthly decline since the fall of 9.6% in February.

Alibaba Group, Meituan, Baidu, Tencent,  and JD.com dropped between 2% and 2.5%.

Henderson Land Development, Sun Hung Kai, and New World Development fell between 3% and 5%.

 

Broad Rally Lifts India Indexes Ahead of Union Budget

Stocks in Mumbai advanced, and bond yields and the rupee held firm ahead of the release of the budget by the finance ministry.

The Sensex and the Nifty index gained more than 0.3% as investors added positions in banks, oil refiners and distributors, and infrastructure developers.

Sustained buying by foreign and domestic investors supported the rebound in stocks a day after indexes dropped more than 1%.

The Sensex index increased 258.61 points to 71,397.30, and the Nifty index rose 74.60 points to 21,596.70.

On the Mumbai stock exchange, 248 stocks traded at their 52-week highs and 14 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds increased to 7.16%, and the Indian rupee held steady at ₹83.13 against the U.S. dollar.

Larsen & Toubro declined 1.9% to ₹3,639.85 after the infrastructure construction company estimated new order weakness in the next two quarters due to the Lok Sabha elections.

Revenue in the December quarter jumped 18.8% to ₹55,128 crore, and net income advanced 15.5% to ₹2,947 crore from ₹2,553 crore a year ago.

New orders in the quarter rose to ₹75,990 crore, driven by a 29% jump in international orders and a 44% decline in domestic orders.

Total order backlog soared to ₹4.69 lakh crore, or trillion, of which international orders are 29%, at the end of the quarter.

Dr. Reddy's Laboratories declined 0.2% to ₹5,835.0 after the generic pharmaceuticals maker reported a rise in sales and earnings in its latest quarter.

Revenue in the December quarter increased 7% to ₹7,215 crore, and net income jumped 11% to ₹1,379 crore from a year ago, respectively.