Asian Shares Rise Despite Weaker China Data

fx brokers currency hedger.jpg

Asian stocks rose on Wednesday as investors digested a raft of economic data, corporate earnings results and weaker-than-expected Chinese manufacturing data.

China's Shanghai Composite index rallied 1.35 percent to close at 2,602.78, a day after the country's securities regulator promised measures to improve market liquidity, encourage share buybacks and mergers and acquisitions. Hong Kong's Hang Seng index jumped 1.60 percent to 24,979.69.

Traders ignored the latest PMI numbers confirming a broad-based decline in Chinese economic activity.

China's official manufacturing PMI fell to 50.2 in October, the lowest since July 2016 and down from 50.8 in September, in a sign of further loss of momentum in the world's second-largest economy.

The services PMI dropped from 54.9 to 53.9, marking the weakest pace of expansion since August 2017.

On the heels of the disappointing data, the People's Bank of China weakened the yuan fix to the lowest in more than a decade.

Japanese shares hit a one-week high and the yen edged lower against the dollar after the Bank of Japan left interest rates steady, cut its inflation forecasts and signaled it was a long way off from exiting its massive stimulus program.

Investors shrugged off weak data showing that industrial production in the country fell 1.1 percent in September from the previous month, missing expectations for a decline of 0.3 percent.

The Nikkei average jumped 463.17 points or 2.16 percent to 21,920.46, the highest closing level since Oct. 24. The broader Topix index closed 2.15 percent higher at 1,646.12.

Chip-related stocks followed their U.S. peers higher, with Tokyo Electron rallying 3.6 percent and TDK Corp climbing 6.1 percent. Advantest shares soared 13 percent. Sony jumped 4.7 percent and Honda Motor added 6.5 percent after raising their annual profit forecasts.

Australian markets ended modestly higher, led by banks and energy companies. The benchmark S&P/ASX200 index inched up 0.43 percent to 5830.30, but ended the month down over 6 percent, marking its worst monthly fall since August 2015. The broader All Ordinaries index also closed up 0.43 percent at 5,913.30.

The Australian dollar fell slightly after a government report showed the inflation rate rose 0.4 percent sequentially in the third quarter of 2018, below market expectations for a 0.5 percent gain.

ANZ rose over 1 percent after reporting a 5 percent drop in full-year cash profit, hit by remediation costs in the aftermath of the royal commission.

Commonwealth Bank advanced 1.6 percent after it agreed to sell its Colonial First State asset management business for A$4.13 billion to Japanese bank Mitsubishi UFJ Trust and Banking Corp.

QBE Insurance rallied 2.4 percent after it announced a streamlining of its operations.

Oil stocks also closed broadly higher as oil prices rose for the first time in three sessions. Woodside Petroleum climbed 2.3 percent, Origin Energy added 1.7 percent and Oil Search gained 0.8 percent.

Mining heavyweights BHP Billiton and Rio Tinto ended marginally lower while gold miner Evolution lost 3 percent and Newcrest shed around 1 percent after gold prices settled at a more than one-week low overnight.

South Korea's Kospi average finished 0.74 percent higher at 2,029.69 despite weak data. The country's industrial output fell a seasonally adjusted 2.5 percent sequentially in September, Statistics Korea said.

That follows the downwardly revised 1.3 percent gain in August (originally 1.4 percent). On a yearly basis, industrial production tumbled 8.4 percent following the downwardly revised 2.5 percent increase in the previous month.

New Zealand shares rallied as dual-listed ANZ kicked off the reporting season for the big Australian banks. The benchmark S&P/NZX index jumped 103.93 points or 1.20 percent to 8,752.31.

Kathmandu Holdings led the market higher to end higher by 4.3 percent after First NZ Capital increased its stake in the outdoor retailer. Growth stocks rebounded, with A2 Milk rising 2.5 percent and Synlait Milk climbing as much as 3.8 percent.

The total number of building consents issued in New Zealand fell a seasonally adjusted 1.5 percent on month in September, Statistics New Zealand said - following a 6.8 percent rise in August and a 9.7 percent drop in July.

Overnight, U.S. stocks ended sharply higher despite a spate of mixed earnings results and economic reports. The Dow rallied 1.8 percent, while the Nasdaq Composite and the S&P 500 gained around 1.6 percent.