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China Stocks Higher Despite Data

Stock market gains were capped on Thursday in much of Asia in the wake of China’s downbeat factory activity data, but shares in Shanghai focused on the potential positives from the weak reading and rallied.  The dollar held on to broad gains after minutes from the Federal Reserve’s April meeting contained no major surprises.

Spreadbetters forecast a slightly lower open for Britain’s FTSE .FTSE, Germany’s DAX .GDAXI and France’s CAC .FCHI, in light of subdued Asian stocks and a lack of clear leads from Wall Street.  MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS stood little changed. South Korean, Hong Kong and Malaysian shares slipped, while Australian stocks surged on bargain hunting. Tokyo’s Nikkei .N225 initially set a new 15-year high but pared much of its gains on profit-taking.

The Shanghai Composite Index .SSEC was up 1.2 percent after the flash HSBC manufacturing PMI showed Chinese factory activity contracting for the third month in May.  Weak Chinese readings feed concerns about cooling demand from the global powerhouse, but at the same time they often shore up Chinese stocks by fuelling expectations that policymakers will roll out extra monetary stimulus.

Reuters [1]

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