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Asian markets dip as China's service sector hits a low

Asian stocks slipped on Tuesday (Aug 5) after an HSBC report showed the performance of China's service sector fell to a record low in July, and despite a positive lead from Wall Street.

HONG KONG: Asian stocks slipped on Tuesday (Aug 5) after an HSBC report showed the performance of China's service sector fell to a record low in July, and despite a positive lead from Wall Street.

The HSBC China services Purchasing Managers' Index in July slipped to 50.0, the dividing line between expansion and contraction, down from 53.1 in June.

"The weakness in the headline number likely reflects the impact of the ongoing property slowdown in many cities, as property-related activity, such as agencies and residential services, see less business," Qu Hongbin, HSBC Chief Economist for China, said in a statement.

Tokyo's Nikkei fell 1.00 per cent or 154.19 points to close at 15,320.31, Sydney dropped 22.3 points, or 0.40 per cent, to finish at 5,518.6, and Seoul shed 0.68 per cent, or 14.16 points, to end at 2,066.26.

Hong Kong closed up 0.20 per cent or 48.18 points to 24,648.26, while Shanghai slipped 0.15 per cent, or 3.38 points, to 2,219.95. Shenzhen rose 0.72 per cent, or 8.4 points, to 1,172.76.

Traders also said an overnight recovery in US stocks failed to follow through in Asia. In the United States, the Dow Jones Industrial Average rose 0.46 per cent, the S&P 500 rose 0.72 per cent, and the Nasdaq Composite Index advanced 0.72 per cent by the close on Monday (Aug 4).

BARGAIN-HUNTING

Peter Cardillo, chief market economist at Rockwell Global Capital, said traders were bargain-hunting after sharp losses at the end of July. Last week, the Dow shed its gains for the year in its worst week since January, and the S&P 500 recorded its biggest weekly decline since mid-2012.

Investors are also looking to see if the Dow's dip was an anomaly, as well as to forthcoming data on factory orders, the trade deficit and jobless claims, which are out later this week.

In currency markets, the euro stayed weak against the dollar in Asia on Tuesday as investors awaited eurozone data and a monthly policy meeting of the European Central Bank (ECB).

The euro bought US$1.3420 in Tokyo afternoon trade against US$1.3421 in New York late Monday, while buying 137.61 yen against 137.64 yen in US trade. The dollar slipped to 102.49 yen in Tokyo afternoon trade from 102.56 yen in US trade Monday.

On oil markets, the US benchmark West Texas Intermediate (WTI) for September delivery rose 10 cents to $98.39, while Brent crude for September gained 15 cents to US$105.56 in afternoon trade.

Gold fetched US$1,292.10 an ounce by 1050 GMT compared with US$1,292.80 late on Monday.

In other markets:

-- Bangkok rose 0.63 per cent or 9.60 points to 1,528.98.

Telecoms company True Corporation soared 8.16 per cent to 10.60 baht, while hospitality firm Minor International gained 4.76 per cent to 33.00 baht.

-- Jakarta ended down 0.20 per cent, or 10.16 points, at 5,109.09.

Tin miner Timah gained 2.14 per cent to 1,430 rupiah, while palm oil firm Wilmar Cahaya Indonesia fell 9.72 per cent to 2,275 rupiah.

-- Kuala Lumpur shed 0.43 per cent, or 8.02 points, to close at 1,863.34.

Malaysia Airlines System gained 2.17 per cent to close at 0.24 ringgit, Cycle & Carriage Bintang shed 2.53 per cent to end lower at 2.31 ringgit, and Sime Darby closed 0.52 per cent lower on 9.51 ringgit.

-- Mumbai advanced 0.72 per cent, or 184.85 points, to end at 25,908.01.

HDIL climbed 8.63 per cent to 100.05 rupees, while Cummins India rose 6.52 per cent to 669.15 rupees.

-- Singapore rose 0.28 per cent, or 9.27 points, to 3,327.67.

United Overseas Bank was down 0.61 per cent to S$22.80 while oil rig maker Keppel Corp gained 0.83 per cent to S$10.89.

-- Taipei shed 2.02 per cent, or 188.75 points, to 9,141.44.

Taiwan Semiconductor Manufacturing Co lost 3.24 per cent to NT$119.5, while Hon Hai Precision was off 3.32 per cent to NT$102.0.

-- Wellington was up 0.26 per cent or 13.48 points at 5,104.16.

Air New Zealand rose 2.40 per cent at NZ$1.92 and Fletcher Building was flat at NZ$8.82.

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