Asian Shares Fall as China’s Factory Activity Continues to Decline
Asian stocks slipped on Monday, September 1, 2024, as concerns about China’s economic slowdown persisted. China’s factory activity declined for the fourth consecutive month, reflecting the country’s struggle to meet its growth targets. The Caixin China manufacturing PMI, due later that day, was expected to show another month of contraction, deepening worries about China’s recovery.
Markets in South Korea and Australia experienced losses, while Japan’s stocks showed some resilience with gains. The downturn in China’s economy had a ripple effect across the region, dragging down investor sentiment. US stock futures and Hong Kong’s contracts also dipped slightly following these developments.
Investors are now waiting for key manufacturing data across several Asian nations. The recent poor performance of China’s factories has added pressure on the government to implement more aggressive measures to stabilize the economy. However, many experts believe that significant economic stimulus may not be forthcoming. Kyle Rodda, senior market analyst at Capital.Com Inc., noted, “Another underwhelming set of Chinese PMI figures will put under the spotlight the country’s economic recovery – if one can really call it a recovery.”
In response to these economic headwinds, China’s government intervened in its debt market last Friday to prevent a prolonged bond rally. This intervention, however, has raised new concerns about the government’s ability to provide sufficient stimulus to support the faltering economy. The property sector also continued to struggle, with Hong Kong’s New World Development Co. forecasting its first annual loss in 20 years, further highlighting the economic challenges in the region.
September is typically a volatile month for global markets, and this year appears to be no different. Traders are also eyeing the upcoming US jobs report, which will offer insight into the Federal Reserve’s potential interest rate cuts. The report could influence how the Fed approaches its monetary policy, with some expecting a 25-basis-point rate cut.
In the commodities market, oil prices fell as OPEC+ prepared to increase output starting in October. At the same time, gold remained relatively unchanged, despite the uncertainty surrounding China’s economic outlook. Investors continue to monitor the situation closely, with many uncertain about the global impact of China’s ongoing struggles.
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