Asia: Stocks hold gain on China PMI; US futures, dollar weaken

[WELLINGTON] Asian stocks maintained gains as a preliminary Chinese factory gauge missed estimates, reinforcing the need for further government stimulus. US equity-index futures retreated and the dollar was weaker against most peers after a three-day rally.

The MSCI Asia Pacific Index added 0.3 per cent by 11.48am in Tokyo, as the Hang Seng China Enterprises Index traded little changed after dropping as much as 0.8 per cent immediately after the China data. Shares in Shanghai and Shenzhen advanced. Standard & Poor's 500 Index futures slipped 0.2 per cent. The dollar weakened 0.3 per cent versus the euro and 0.2 per cent against Japan's yen. Oil in New York swung to a gain of 0.3 per cent.

An early reading of HSBC Holdings Plc and Markit Economics' May China factory gauge came in at 49.1, missing the 49.3 estimate of economists and below the 50 level that marks the threshold for expansion.

Federal Reserve Chair Janet Yellen gives a speech Friday on the economic outlook after minutes from the central bank's last meeting reinforced the message that borrowing costs could rise at any meeting. European leaders meet to discuss Greece's debt situation.

"The worse the data, the more speculation that more monetary stimulus will be coming," said Wei Wei, an analyst at West China Securities Co in Shanghai. "The market has a consensus that the economy won't pick up any time soon so the impact of the economic data isn't too big."

Preliminary manufacturing gauges for the euro area and the US also due Thursday after a similar measure for Japan showed a quicker-than-estimated expansion.

HANG SENG

The Hang Seng Index was little changed after falling as much as 0.7 per cent and the gauge of Chinese companies listed in Hong Kong was lower for the first time in three days. The Shanghai Composite Index added 0.8 per cent after gaining 3.8 per cent in the previous two days.

Goldin Properties Holdings Ltd, the builder of a luxury polo-themed estate near China's Tianjin city, plunged 50 per cent in Hong Kong, while affiliated Goldin Financial Holdings Ltd tumbled 48 per cent. The companies, controlled by billionaire Pan Sutong, had both surged more than 300 per cent this year through yesterday.

The drops follow Wednesday's suspension of Hanergy Thin Film Power Group Ltd after its stock plunged 47 per cent, wiping out US$19 billion in market value, as its chairman failed to appear at the annual general meeting.

BHP BILLITON

Australia's S&P/ASX 200 Index rose 0.8 per cent after slipping Wednesday to its lowest close since the end of January. BHP Billiton Ltd., the world's largest miner climbed 1.6 per cent after a three-day slide following a spin-off. The Kospi index in Seoul fell 0.7 per cent.

Fed policy makers concluded that the first-quarter slowdown in the US economy was unlikely to persist, the minutes showed.

While "many" officials signaled a June liftoff would be unlikely, a "few" members said they anticipated the economy would be ready by then for the first rate increase since 2006.

Futures on the Dow Jones Industrial Average and the Nasdaq 100 Index also declined.

The Bloomberg Dollar Spot Index, a gauge of the currency versus 10 major peers, was down 0.1 per cent Thursday, after rallying almost 2 per cent through the past three days. The yen strengthened to 121.13 per dollar, while the ringgit snapped a three-day drop to climb 0.5 per cent.

The euro climbed to US$1.1124 after touching a three-week low Wednesday. Australia's dollar gained 0.2 per cent and the Swiss franc advanced 0.4 per cent.

EMERGENCY FUNDS

European Union leaders are due to meet with Greek Prime Minister Alexis Tsipras in Latvia's capital Riga, amid continued wrangling over the indebted nation's bailout.

The European Central Bank's Governing Council consented at a meeting in Frankfurt on Wednesday to a 200 million-euro (S$297 million) increase in emergency funding for Greek banks, people familiar with the discussion said.

July futures on West Texas Intermediate crude climbed 0.3 per cent to US$59.18 a barrel in New York after rising 1.7 per cent on Wednesday, the most since May 12. Brent added 0.4 per cent to US$65.28 a barrel in London.

US crude inventories shrank by 2.67 million barrels through May 15, the Energy Information Administration reported Wednesday.

Prices may fall further as drillers become more efficient and the Organisation of Petroleum Exporting Countries refrains from cutting output, according to Deutsche Bank AG.

BLOOMBERG