SHANGHAI/HONG KONG (Reuters) – Shares in Asia fell on Tuesday as readings on China’s manufacturing activity failed to meet expectations, underscoring weakness in the world’s second-largest economy despite Beijing’s attempts to spur growth.
European equities were set to open mixed, with futures on London’s FTSE up 0.1 percent but those on the German DAX 0.1 percent lower.
Both official and private business surveys pointed to slower Chinese factory growth this month, dashing hopes for a steady reading or even a faster expansion. Data also showed a slower expansion in its services sector, adding to economic uncertainty.
The dollar-denominated MSCI index of Chinese shares dropped 0.4 percent. But shares in Shanghai tilted up 0.3 percent as investors maintained hopes for additional stimulus measures to prop up the economy.
The weak manufacturing numbers suggest “stimulus is there to stay,” said Frances Cheung, head of macro strategy for Asia at Westpac. Upbeat Chinese data for March had prompted some analysts to scale back expectations of additional support measures.
MSCI’s broadest gauge of Asia-Pacific shares outside Japan was off 0.5 percent. Korean shares lost 0.3 percent, the Hong Kong market eased 0.4 percent, while stocks in Australia were down by 0.5 percent.
“A lot of the stimulus measures undertaken by the Chinese authorities are focused domestically, such as VAT changes. They are not expected to have big spillovers” to the rest of Asia, Kerry Craig, Sydney-based global market strategist at JP Morgan Asset Management.
Japan’s financial markets remain closed for a national holiday as Japanese Emperor Akihito prepares to abdicate on Tuesday in favour of his elder son, Crown Prince Naruhito.
Even before the China data, Asian investors had shrugged off cautious gains on Wall Street overnight that had lifted the S&P 500 index to an intraday record high of 2,949.52. The index finished up 0.11 percent at a record closing high of 2,943.03. [.N]
The Nasdaq gained 0.19 percent to 8,161.85, also a record closing high, and the Dow Jones Industrial Average inched up 0.04 percent to 26,554.39.
Investors were also cautious ahead of a two-day meeting of the policy-setting Federal Open Market Committee. The committee is set to release its latest statement at 2 p.m. EDT (1800 GMT) on Wednesday.