Nikkei 225 and CSI 300 Indexes Diverge After Factory Activities Reports

Li Chen
01 Apr, 2024
Hong Kong

Stock markets in Asia lacked momentum amid thin trading as investors in Japan confronted weak economic data, but factory activities rose more than expected in China. 

Investors also reviewed the U.S. Personal Consumption Expenditures Price Index in February, and the alternative measure of inflation watched by the Federal Reserve rose less than expected. 

The latest update on the index was released on Friday, and the U.S. market will react to the data for the first time on Monday after trading resumes following the Good Friday holiday. 

The PCE price index rose 2.5% from a year ago and advanced 0.3% from the previous month, the U.S. Bureau of Economic Analysis reported Friday. 

The index accelerated to an annual rate of 2.5% from 2.4% and slowed to 0.3% monthly from 1.0% in the previous month, respectively. 

The core rate, which excludes volatile food and energy prices, rose at a slower pace of 2.8% from the 2.9% rate in January. 

 

Nikkei 225 Drops 1% Amid Weak Key Economic Reports 

Benchmark indexes in Tokyo headed lower and extended losses after the Bank of Japan showed a decline in sentiment among large manufacturers. 

The quarterly Tankan survey showed that sentiment among large manufacturers eased to +11 in the first quarter from an upwardly revised +13 in the fourth quarter, while the manufacturing outlook for the second quarter points to a further slowdown to +10.

The weakness in the outlook was due to the shut-down of automobile manufacturing plants. 

The au Jibun Bank Japan Manufacturing PMI was confirmed at 48.2% in March, following the final reading of 47.2 in February, which was the lowest level since August 2020, according to S&P Global. 

The private survey showed that factory activities contracted for the tenth month in a row, but the decline was the smallest since November, amid softer declines in output and new orders falling at the slowest pace in five months. 

Nonetheless, factory activities continued to shrink amid global macroeconomic headwinds and continued supply chain disruptions in the Red Sea and Panama Canal. 

The Nikkei 225 stock average decreased 1.1% to 39,920.18, and the Topix index dropped 1.5% to 39,920.18. 

Stocks declined in a broad-based sell-off, and technology, financial services providers, and diversified conglomerates led the decliners. 

SoftBank, Screen Holdings, Advantest, Tokyo Electron, and Disco Holdings dropped between 1.5% and 4%. 

Mitsubishi UFJ, Mizuho Financial Group, and Sumitomo Mitsui are around 3.5%. 

Marubeni, Itochu, Mitsui & Company, Mitsubishi Corp., and Sumitomo declined between 1.3% and 3.0%. 

 

China Manufacturing Activities Expanded Fifth Consecutive Month

Chinese stocks jumped and benchmark indexes advanced the most in a month after a private survey showed China's manufacturing activities rose at a faster-than-expected pace in March. 

The Caixin China General Manufacturing PMI was 51.1 in March, higher than 50.9 in February. 

The 50-level mark separates growth from contraction, and activities expanded for the fifth month in a row and reached their highest level since February 2023. 

The CSI 300 index jumped 1.5% to 3,589.29, and financial markets in Hong Kong were closed for a public holiday. 

 

Foreign Investors Increase Exposure to Chinese stocks

Stocks also powered ahead after the data from exchanges showed that foreign investors purchased $11.5 billion of mainland stocks in the last two months. 

Funds controlled by foreign investors purchased 22 billion yuan, or $3 billion, of stocks in March, following the purchase of 60.7 billion yuan in February, according to Stock Connect data. 

Foreign investors have been selling mainland China stocks for six months in a row between August and January due to the protracted property market malaise, weak consumer confidence, and fragile economic recovery after the ending of zero COVID restrictions. 

BYD added 3.8% to 210.70 yuan, CATL gained 4% to 197.96 yuan, Ganfeng Lithium Group advanced 7.7% to 39.15 yuan, and Tianqi Lithium added 4.8% to 50.27 yuan. 

 

India Stocks Advance Ahead of Rate Decision 

Stocks in Mumbai advanced amid thin trading in Asia and positive international sentiment. 

The Sensex and the Nifty indexes gained more than 0.7%, and the yield on Indian government bonds held steady in the hopes that the Reserve Bank of India would hold its benchmark rate later in the week. 

Market sentiment was positive, and metals stocks advanced after a private survey showed China's manufacturing activities rose at a faster-than-expected pace in March. 

The Sensex index increased 0.7% to 74,213.44, and the Nifty index edged up 0.8% to 22,519.55. 

On the Mumbai stock exchange, 95 stocks traded at their 52-week highs and 37 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds decreased to 7.05%, and the Indian rupee held steady at ₹83.35 against the U.S. dollar.

Prestige Estates Projects jumped 4% to ₹1,217.60 after the company struck an investment partnership with the Abu Dhabi Investment Authority and funds controlled by Kotak Mahindra. 

NHPC rose 0.5% to ₹89.30, and the company secured a loan of 20 billion yen from a Japan-controlled investment company for the construction of a power plant in Manipur.