Asia: Stocks rise, bonds slide after China industry data

[SYDNEY] Financial markets started December with a risk-on mood in Asia following a better-than-expected reading on Chinese manufacturing that added to evidence the global economy is turning a corner.

Japanese stocks led equity gains across the region, while S&P 500 Index futures edged up. Ten-year Treasury yields climbed to 1.8 per cent, and their Japanese counterparts ticked up closer toward zero. The yen retreated. Sentiment could still be kept somewhat in check by the continuing lack of closure on a US-China trade deal. China's Global Times underscored that its government wants tariffs to be rolled back as part of "phase one".

The so-called official China manufacturing purchasing-manager index exceeded all estimates in a Bloomberg survey, and suggested an acceleration in activity in November. A second gauge is due Monday.

"This improvement in the manufacturing PMI is important because we can say with more certainty, than at the beginning of the year, that China's macro outlook is indeed stabilizing," said Aninda Mitra, senior sovereign analyst at BNY Mellon Investment Management.

Also looming on the data front this week are readings on American manufacturing and employment. Meanwhile, Black Friday hit a record US$7.4 billion in US online sales.

Hong Kong shares had modest gains at the open, even after clashes between protesters and police resumed over the weekend. Elsewhere, oil prices recouped some of their 5 per cent-plus sell-off on Friday.

Key events

US ISM manufacturing and construction spending on Monday. Saudi Aramco's initial public offering is scheduled to be priced on Thursday.

Friday brings the US jobs report, where estimates are for nonfarm payrolls to rise by 190,000 in November.

Stocks

Japan's Topix index added 0.9 per cent as of 10.25am in Tokyo. South Korea's Kospi climbed 0.3 per cent.

The Shanghai Composite rose 0.1 per cent. Hong Kong's Hang Seng Index gained 0.5 per cent.

Futures on the S&P 500 rose 0.3 per cent. The underlying gauge slipped 0.4 per cent on Friday.

Australia's S&P/ASX 200 Index advanced 0.6 per cent.

Currencies

The yen dipped 0.2 per cent to 109.68 per US dollar.

The offshore yuan held at 7.0286 per US dollar.

The pound slid 0.1 per cent to $1.2915.

Bonds

The yield on 10-year Treasuries climbed three basis points to 1.81 per cent.

Australia's 10-year yield rose four basis points to 1.07 per cent.

Commodities

West Texas Intermediate crude rose 1.8 per cent to US$56.16 a barrel.

Gold slipped 0.2 per cent to US$1,460.60 an ounce.

BLOOMBERG