InvestmentsAug 5 2014

Asia-Pacific equities drift lower

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Equities across Asia-Pacific were weaker on Tuesday, with losses in Hong Kong and Australia amplified by data suggesting China’s services sector had stagnated for the first time in nine years, reports FTAdviser sister title FastFT.

• Japan’s Nikkei 225: -0.2%

• Australia’s S&P/ASX 200: -0.3%

• Hong Kong’s Hang Seng: -0.2%

• Shanghai Composite: -0.3%

• Korea’s Kospi: -0.4%

Among the reasons for a subdued tone: HSBC’s purchasing managers index for China’s services sector fell to a reading of 50 for July, the lowest reading in records dating back to November 2005. It takes a reading above 50 to suggest growth.

“The weakness in the headline number likely reflects the impact of the ongoing property slowdown in many cities,” said Hongbin Qu, chief economist for China at HSBC.

The survey is much less influential on markets than various reports tracking the manufacturing sector, but it still had an impact.

Other new data from Asia-Pacific was okay, but not market-moving. In Australia, the trade deficit narrowed from A$2.0bn in May to A$1.68bn in June.

“The June trade balance appeared better than expected ... but is still part of a string of chunky deficits in recent months,” said Annette Beacher at TD Securities.

In Japan, Markit’s service sector purchasing managers index rose from 49 in June to 50.4 in July, the highest level since March. This marked the first time the index showed expansion since Japan’s national sales tax was lifted from 5 to 8 per cent in April.

The major currencies in the region were little changed. The Aussie dollar fell 0.1 per cent as traders took a cautious stance ahead of an afternoon monetary policy statement from the Reserve Bank of Australia. The Japanese yen was flat at 102.6 per dollar.