By Daniel Inman
Asian stocks edged lower on Monday, losing earlier gains
prompted by an upbeat reading in China's service sector, with
Thailand falling due to continued political tensions.
Much of the region started the day higher on signs of growth in
China's services sector, as the official Non-Manufacturing
Purchasing Managers' Index rose to 56.3 in October, according to
data released over the weekend. The measure was much higher than
the 50 mark that separates expansion from contraction and was the
highest reading in 14 months.
The effect of the data was short-lived, as the region dropped
lower ahead of a number of major events that could affect markets.
The big event for Asia will be the upcoming key meeting of China's
Communist Party, where the new leadership is expected to discuss
the reform agenda. In terms of global news, investors are
anticipating the U.S. labor report, due out on Friday.
Hong Kong's Hang Seng Index was down 0.1%, and the Shanghai
Composite fell less than 0.1%
Australia's S&P ASX 200 dropped 0.2%, and South Korea's
Kospi lost 0.5%. In Singapore, the Straits Times Index rose
0.1%.
The impact of the Chinese data was more noticeable in
Australia's currency on Monday, which knocked higher early in the
session and received a further boost after local retail sales rose
much more than expected in September. The so-called Aussie (AUDUSD)
was at 94.77 U.S. cents, compared to 94.39 U.S. cents late Friday
in New York.
The next event for the currency will be the Reserve Bank of
Australia's meeting on Tuesday. A dovish speech given last week by
Glenn Stevens, the central bank's governor, raised expectations
that interest rates could be cut again.
The biggest move in Asia occurred in Thailand, where the SET
fell 1.6% after a weekend of escalating political tension in the
country over an amnesty bill. It is seen by critics as an attempt
to allow Thaksin Shinawatra, the country's former leader and
brother of the current prime minister, to return to Thailand from
self-imposed exile.
In Japan, where stock markets stopped trading Monday for a
public holiday, the yen (USDJPY) was little moved at Yen98.75 to
the dollar.
Earnings season continued in Australia, with Westpac Banking
Corp. (WBK) fell 1.2% after the country's second-largest bank by
market value reported a fiscal-year profit that beat expectations,
as well as issuing a special dividend, though this was offset by a
pre-prevision operating profit that undershot forecasts.
Also in Sydney, Coca-Cola Amatil (CCLAF) dropped 4.8% after
warning that its fiscal-year earnings before interest and tax would
be down between 5% and 7%.
The main earnings announcement for the region on Monday will
likely be HSBC Holdings (HBC). The largest constituent on Hong
Kong's Hang Seng Index is scheduled to announce its latest earnings
after the market closes. The lender's stock was up 0.1%.
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