Asian Shares Mixed As Factory Activity Slows

Asian stocks ended mixed on Wednesday after a private survey showed Chinese factory activity shrank less sharply than expected in May.

The Caixin/Markit manufacturing PMI rose to 48.1 in May from a 26-month low of 46.0 in the previous month.

Manufacturing expansion slowed in Australia and Japan’s manufacturing activity grew at the weakest pace in three months, underlining investor worries over an economic slowdown.

A firmer dollar and higher Treasury yields weighed on gold prices, while oil prices rose over 1 percent in Asian trading on expectations of firmer fuel demand from China.

China’s Shanghai Composite Index slipped 0.1 percent to 3,182.16 as Shanghai formally ended its two-month citywide lockdown. Hong Kong’s Hang Seng Index ended 0.6 percent lower at 21,294.94.

With China committed to its COVID-Zero policy, there were fears that restrictions will be swiftly reimposed in the event of any further virus flare-ups.

The South Korean market was closed for a holiday. Japanese shares rose notably as automakers rallied after J.P. Morgan analysts forecast record profits this year on the back of price hikes and reductions in some production-related expenses.

Nissan Motor soared 7.8 percent, while Honda Motor surged 4.3 percent and Toyota Motor added 3.5 percent. Drug maker Daiichi Sankyo led losses to close 4.9 percent lower.

Australian markets eked out modest gains as investor cheered better-than-expected growth data and the easing of Covid-19 restrictions in China.

The benchmark S&P/ASX 200 Index rose 0.3 percent to 7,234, while the broader All Ordinaries index edged up 0.1 percent to 7,462.90.

The big banks rose between 0.9 percent and 2.3 percent on expectations of a larger 40 basis points rate hike by the RBA this month.

Lithium and rare earth miners declined after Goldman Sachs forecast a sharp correction in lithium prices over the next two years. IGO lost 11.8 percent, Liontown Resources slumped 19.1 percent and Pilbara Minerals plunged 22 percent.

New Zealand shares advanced, with the benchmark S&P/NZX 50 Index rising 0.6 percent to 11,373.24. A2 Milk shares rose 1.9 percent to extend gains for a third straight day.

U.S. stocks closed lower overnight and U.S. Treasury yields rose sharply as the EU’s Russian oil ban lifted crude prices to new highs, raising fresh concerns about inflation and aggressive policy tightening.

The Dow dipped 0.7 percent, the S&P 500 shed 0.6 percent and the tech-heavy Nasdaq Composite eased 0.4 percent.

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