Shanghai up after soft China PMI, Tokyo extends gains

A man looks at an electronic stock indicator of a securities firm in Tokyo, Thursday, May 21, 2015. Shanghai advanced on Thursday after another tepid reading on Chinese manufacturing activity that will likely raise hopes for fresh monetary easing, while Tokyo edged up to a new 15-year high. AP PHOTO/SHIZUO KAMBAYASHI

HONG KONG–Shanghai advanced on Thursday after another tepid reading on Chinese manufacturing activity that will likely raise hopes for fresh monetary easing, while Tokyo edged up to a new 15-year high.

The dollar held up despite minutes from the Federal Reserve’s April policy meeting showing that board members thought it unlikely the US economy would be strong enough to hike interest rates in June.

Shanghai rallied 1.87 percent, or 83.13 points, to 4,529.42 and Tokyo gave up most early gains to end marginally higher, adding 6.31 percent to 20,202.87–its highest since April 2000. Sydney added 0.93 percent, or 52.0 points, to 5,662.3.

Seoul fell 0.78 percent, or 16.73 points, to close at 2,122.81 and Hong Kong eased 0.22 percent, or 61.33 points, to close at 27,523.72.

A preliminary reading of HSBC’s purchasing managers’ index (PMI) for China showed activity picked up in May, but continued to shrink, despite Beijing’s efforts to kick-start the sluggish economy, including three interest rate cuts since November.

The index registered 49.1 this month, a two-month high but still below the 50 mark that separates contraction from growth. It was at 48.9 in April.

“It remains extremely hard if not impossible for any revival to be sustained,” Wang Tao, chief China economist at UBS Group AG in Hong Kong, wrote in a report before the data release.

“Further policy support is still needed to stabilize China’s growth momentum and arrest the passive tightening of monetary conditions,” Wang said, according to Bloomberg News.

Traders were given a weak lead after the Dow and S&P 500 closed lower following the Fed minutes, which raised concerns about the state of the world’s top economy.

June rate hike unlikely

“Many participants” at the US central bank’s latest meeting “thought it unlikely that the data available in June” would meet conditions required for a rate hike, the minutes said.

Policymakers expressed concern about weak economic reports in the first quarter, although the data was generally viewed as due to “transitory” factors, such as severe winter weather and the West Coast port strike that ended in late February.

The Dow fell 0.15 percent and the S&P 500 slipped 0.09 percent but the Nasdaq edged up 0.03 percent.

The outcome of the meeting pressed the dollar lower, buying 121.10 yen in afternoon trade, down from 121.32 yen in New York but still up from 121.02 yen in Tokyo earlier Wednesday.

The euro bought $1.1094 and 134.32 yen against $1.1096 and 134.61 yen in US trade.

Oil prices extended a rally after a fall in US stockpiles fueled hopes of an easing in the global supply glut.

US benchmark West Texas Intermediate for July delivery rose 22 cents to $59.20 while Brent crude for July gained 32 cents to $65.35 in afternoon trade.

WTI jumped 99 cents and Brent on Wednesday climbed $1.01.

Gold fetched $1,209.50 compared with $1,208.82 late Wednesday.

In other markets:

— Mumbai fell marginally by 0.10 percent, or 27.86 points, to end at 27,809.35 points.

Tata Steel fell 5.11 percent to 342.90 rupees, while motorcycle maker Bajaj Auto rose 6.94 percent to 2,299.75 rupees.

— Bangkok closed up 0.40 percent, or 6.14 points, at 1,526.25

Airports of Thailand rose 1.66 percent to 235 baht while Siam Commercial Bank rose 0.94 percent to 161 baht.

— Jakarta ended up 0.39 percent, or 20.46 points, at 5,313.21.

Indonesia-based pharmaceutical company Kalbe Farma rose 1.67 percent to finish at 1,830 rupiah, while food giant Indofood Sukses Makmur slipped 1.08 percent to 6.850 rupiah.

— Malaysia’s main share index lost 0.83 percent, or 15.07 points, to close the day on 1,795.04.

CIMB Group fell 2.5 percent to 5.86 ringgit, Malayan Banking dipped 1.28 percent to 9.25 while Tenaga Nasional added 0.14 percent to 14.00 ringgit.

— Singapore rose 0.01 percent, or 0.18 points, to close at 3,439.86.

Singapore Telecom jumped 0.47 percent to Sg$4.26 and oil rig maker Keppel Corp. declined 0.92 percent to Sg$8.78.

— Taipei fell 1.10 percent, or 106.75 points, to 9,578.56.

Taiwan Semiconductor Manufacturing Co. closed 0.68 percent lower to Tw$145.5 while Fubon Financial Holding shed 3.26 percent to Tw$62.3.

— Wellington edged up 0.23 percent, or 13.48 points, to 5,769.27.

Online auction house Trade Me rose 2.66 percent to NZ$3.86, while Air New Zealand was flat at NZ$2.95.

— Manila closed 0.59 percent lower, giving up 46.55 points to 7,835.38.

Alliance Global Group sank 7.20 percent to 22.55 pesos, Ayala Land fell 1.83 percent to 40.20 pesos and SM Investments eased 0.22 percent to 900 pesos.