Hong Kong leads losses in Asia; data shows contraction in Chinese manufacturing activity

Key Points

• Shares in Asia-Pacific fell in Friday morning trade.
• The Caixin/Markit manufacturing Purchasing Managers’ Index came in at 48.1, the lowest since Feb. 2020.
• Sentiment at Japan’s large manufacturers soured in the three months to March, the Bank of Japan’s quarterly tankan business sentiment survey showed Friday. The headline index for large manufacturers’ sentiment came in at plus 14, a decline from the previous quarter’s reading of plus 17.

SINGAPORE — Shares in Asia-Pacific fell Friday morning following overnight losses on Wall Street as a private survey showed Chinese manufacturing activity shrank in March.

Hong Kong’s Hang Seng index led losses regionally, falling 1.37% in morning trade.

Chinese tech stocks in Hong Kong saw big losses, with Alibaba falling 5.35% and Meituan slipping 4.88%. Baidu plunged 8.62% while Tencent shed 2.03%. The Hang Seng Tech index traded 3.76% lower.

Trading in a number of Hong Kong-listed companies, including Chinese real estate firms Kaisa Group and Sunac, was suspended after missing the deadline for reporting annual results.

In mainland China, the Shanghai composite dipped 0.1% while the Shenzhen component declined 0.281%.

The Caixin/Markit manufacturing Purchasing Managers’ Index came in at 48.1, below the 50-level that separates growth from contraction. That compared against the previous month’s reading of 50.4. Friday’s reading was also the lowest since February 2020.

TICKER	COMPANY	NAME	PRICE	CHANGE	%CHANGE
.N225	Nikkei 225 Index	*NIKKEI	27618.27	-203.16	-0.73
.HSI	Hang Seng Index	*HSI	21807.16	-189.69	-0.86
.AXJO	S&P/ASX 200	*ASX 200	7511.2	11.6	0.15
.SSEC	Shanghai	*SHANGHAI	3277.49	25.29	0.78
.KS11	KOSPI Index	*KOSPI	2742.6	-15.05	-0.55
.FTFCNBCA	CNBC 100 ASIA IDX	*CNBC 100	9221.05	-82.11	-0.88

Data released Thursday also showed Chinese factory activity shrinking in March, with the official manufacturing PMI coming in at 49.5, below February’s reading of 50.2.

The data comes as China battles its most severe Covid-19 outbreak since the pandemic began.

Elsewhere in Asia-Pacific, the Nikkei 225 slipped 0.61% while the Topix index fell 0.22%.

Sentiment at Japan’s large manufacturers soured in the three months to March, according to the Bank of Japan’s quarterly tankan business sentiment survey. The headline index for large manufacturers’ sentiment came in at 14, a decline from the previous quarter’s reading of 17.

In South Korea, the Kospi dipped 0.7%. Australia’s S&P/ASX 200 hovered fractionally higher.

MSCI’s broadest index of Asia-Pacific outside Japan traded around 0.8% lower.

Overnight stateside, the S&P 500 dropped about 1.57% to 4,530.41. The Dow Jones Industrial Average slipped 550.46 points, or 1.56%, to 34,678.35. The Nasdaq Composite declined 1.54% to 14,220.52.

The losses on Wall Street came as the 2-year and 10-year U.S. Treasury yields briefly inverted for the first time since 2019, a move that is seen as a potential warning signal of recession ahead. The 2-year and 10-year spread was last in negative territory before pandemic lockdowns sent the global economy into a steep recession in early 2020.

The yield on the 2-year Treasury note last sat at 2.3607%, while the 10-year yield was at 2.369%.

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“It’s always a tricky business to assume that an inversion of the yield curve is … somehow a different signal this time than it was last time,” Paul Christopher, head of global market strategy at Wells Fargo Investment Institute, told CNBC’s “Squawk Box Asia” on Friday.

“We take it seriously. We do see some other indicators that are flashing red in the economy right now such as consumer sentiment and forward expectations,” Christopher said.

Still, he said an inversion would be more significant if it persisted for at least a month.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.4 following a recent bounce from levels below 98.

The Japanese yen traded at 122.17 per dollar, stronger than levels above 122 seen against the greenback yesterday. The Australian dollar changed hands at $0.748, off levels around $0.747 seen yesterday.

Oil prices were higher in the morning of Asia trading hours, with international benchmark Brent crude futures up 0.38% to $105.11 per barrel. U.S. crude futures rose fractionally to $100.35 per barrel.

Source : CNBC