Asian Shares Rise, Tankan Lifts Nikkei
07/01/2012| 09:55pm US/Eastern
Asian markets etched out small gains Monday as a rally in commodity stocks was slightly offset by continued weakness in the Chinese manufacturing sector.
Investors were digesting two sets of data, both showing a slowdown in Chinese manufacturing. The official purchasing managers' index was released over the weekend and was 50.2. Though the figure was just above 50, indicating a small increase in manufacturing activity, it was the worst figure since November.
The rival HSBC PMI, which focuses more on small- and medium-sized companies than the official data, came out Monday morning and showed a weakening in June to 48.2, suggesting a contraction in activity, compared with 48.4 in May.
The PMI data is "not horrible, but it isn't showing a rebound," said Gigi Chan, manager of Threadneedle's $100 million China Opportunities Fund in Singapore. "Some people had hoped that some of the stimulus might have kicked in."
The China Shanghai Composite dipped as soon as the HSBC data were released, before pulling up to take a 0.1% gain. Hong Kong's Hang Seng Index was closed for a public holiday.
Australia's S&P ASX 200 gained 1.3%, South Korea's Kospi was 0.3% higher, and Singapore's Straits Times Index was up 0.7%.The Nikkei Average was up just 0.3%, after the Bank of Japan's quarterly tankan survey, a measure of business confidence, exceeded expectations. The survey's headline diffusion index for manufacturers improved to a reading of minus one, compared with a minus three forecast by economists. The strong result in the tankan reflects "a steady recovery in exports, especially in the auto industry," said RBS Securities chief economist Junko Nishioka. As the car industry has a broad industry base, its recovery is "creating a ripple effect throughout other sectors of the Japanese economy."
Gains in the Japanese benchmark were led by trading companies such as Marubeni and Itochu, up 1.9% and 1.6%, respectively, and energy companies like JX Holdings, which climbed 1.5%.
Concerns over the European debt crisis were weaker, though the euphoria that immediately followed the summit of European leaders late last week, moderated in Asia as investors started to think about the actual implementation of the bank bailout plan.
The euro weakened Monday. At $1.2620, the single currency gave up some of the 1.8% gain that it made Friday when it climbed to $1.2661.
Miners across the region benefitted from an increase in commodity prices; copper on Friday touched its highest price since late May. The effect was most apparent on the resource-heavy Australian market, where Rio Tinto and BHP Billiton lead a broad advance in mining stocks, climbing 0.7% and 1.4%, respectively.
Gold dropped to $1592.70 an ounce Monday, eating into some of the 3.5% gain it made Friday. The increased value of the precious metal proved a boon for gold miners. Newcrest Mining gained 4% in Australia.
Write to Daniel Inman at Daniel.Inman@wsj.com