Asia report: Markets rise as China's manufacturing activity expands

(Sharecast News) - Asia-Pacific markets advanced on Monday as investors turned their attention to key economic readings across the region, buoyed by strong data out of China and Australia. The region-wide optimism came amid China's official manufacturing PMI for November, which beat expectations to hit its highest level since April, and Australia's retail sales growth, marking the fastest year-on-year increase since May.

"The dollar is gaining momentum on Monday, recovering some of the losses from last week, partly due to unusual supportive remarks from the US president-elect Donald Trump," said TickMill partner Patrick Munnelly.

"Although 100% tariffs seem unlikely, his latest comments indicate a shift from his previous stance, where he openly advocated for a weaker dollar to address the US trade deficit.

"The market interpreted this as a sign that he won't exert pressure on the currency."

Munnelly noted that the yuan renminbi reacted negatively, hitting a three-month low against the dollar, adding that the dollar also rose against the yen, overshadowing more hawkish comments from Bank of Japan governor Kazuo Ueda, who mentioned that the next interest rate hikes were nearing as economic data was on track.

"Ueda's remarks, along with data showing Japanese business investment increasing at a robust 8.1% in the third quarter, led markets to estimate a 65% likelihood that the BoJ will raise rates by a quarter point to 0.5% during its policy meeting on 18-19 December.

"This probability is nearly identical to the market's expectation that the Federal Reserve will lower rates by a quarter point at its meeting on 18 December, although much will hinge on the results of this week's ISM surveys and payroll data."

Markets in the green across the Asia-Pacific region

In Japan, the Nikkei 225 rose 0.8% to close at 38,513.02, while the Topix climbed 1.27% to 2,714.72.

Gains were led by Fujikura, which surged 6.39%, followed by Dai-ichi Life Holdings and Hitachi, up 6.27% and 5.2%, respectively.

China's major indices also posted robust gains, with the Shanghai Composite rising 1.13% to 3,363.98 and the Shenzhen Component up 1.36% to 10,756.55.

Leading the charge were Hainan Airlines, JiShi Media, and Maanshan Iron & Steel, all of which soared by over 10%.

Hong Kong's Hang Seng Index added 0.65% to close at 19,550.29.

BYD Electronic International was a standout performer, jumping 11.29%, while Nongfu Spring and Zhongsheng Group climbed 8.31% and 4.96%, respectively.

South Korea's Kospi 100 rose modestly by 0.36% to 2,465.76, driven by a sharp 19.58% gain in Korea Zinc and notable advances in KakaoPay and Coway.

Australia's S&P/ASX 200 edged up 0.14% to close at a record high of 8,447.90, propelled by a 29.61% rally in De Grey Mining.

Gold Road Resources and Mineral Resources also posted strong gains, up 9.38% and 6.22%, respectively.

New Zealand's S&P/NZX 50 gained 0.37% to 13,114.68, supported by advances of 3.74% in Auckland International Airport, 2.25% in Meridian Energy, and 1.92% in Manawa Energy.

In currency markets, the dollar was last up 0.29% on the yen to trade at JPY 150.20, while it gained 0.27% against the Aussie to AUD 1.5397, and advanced 0.16% on the Kiwi, changing hands at NZD 1.6929.

Oil prices advanced, with Brent crude futures last up 0.99% on ICE at $72.55 per barrel, and the NYMEX quote for West Texas Intermediate rising 0.96% to $68.65.

China manufacturing activity expands, retail sales rise down under

In economic news, China's manufacturing activity expanded in November, with smaller manufacturers benefiting from recent government stimulus measures, according to a private survey.

The Caixin/S&P Global manufacturing PMI rose to 51.5, surpassing expectations of 50.5 from a Reuters poll and marking the second consecutive month of growth.

That followed Saturday's official PMI release, which showed manufacturing activity edging up to 50.3 from October's 50.1, also beating forecasts.

In the property sector, new house prices in China increased at a faster pace in November, suggesting a potential recovery in the beleaguered real estate market.

Average prices for new houses across 100 cities climbed 0.36% month-on-month and 2.4% year-on-year, according to data from the China Index Academy.

The improvement followed October's gains of 0.29% and 2.08%, respectively, and aligned with expectations that recent support measures could begin to stabilise the property market in the coming years.

Elsewhere, Australia's retail sales surged in October, providing a boost to the economy.

Seasonally adjusted retail sales rose 3.4% year-on-year, the fastest pace since May 2023, with a monthly increase of 0.6%.

The figure outpaced economists' forecasts of a 0.4% rise, bringing total retail sales to AUD 36.7bn (£18.75bn).

Reporting by Josh White for Sharecast.com.