An index of Asian shares outside Japan fell close to this year’s lows thanks to a deepening selloff in commodities and concerns over slowing growth in China, while the dollar held its ground against a basket of currencies. China’s factory activity shrank more than initially estimated in July, contracting by the most in two years as new orders fell, according to a private survey that dashed hopes that the economy may be steadying.
“We believe the stock market panic in early July chilled economic activity, which is what the manufacturing PMIs picked up,” ING economist Tim Condon said in a research note ahead of the Caixin PMI release. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell more than 1 percent before paring losses to be down 0.9 percent. The biggest losers were financials and cyclicals. The index’s low for this year was on July 8.
Stock markets across the region declined with Japan’s Nikkei .N225 down 0.5 percent and South Korea’s Kospi .KS11 falling 0.9 percent. “We believe the macro environment remains challenging for emerging market assets amid headwinds of low commodity prices, concerns over China and a looming Fed tightening cycle,” Barclays strategists wrote in a daily note in clients.
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