Stocks in the Asian market closed negative on Wednesday, as the region benchmark index withdrew from its two-month high, after it was revealed that the Chinese manufacturing sector was contracting faster-than-expected.
The Japanese benchmark Nikkei 225 fell 0.32% to 14,731.28, while Hong Kong’s Hang Seng closed 0.07% lower to 21,896.42.
Tokyo’s broader Topix gauge edged down 0.20% to 1,219.92 , while the China’s mainland Shanghai composite dropped 0.73% to 2,029.00.
However, the South Korean Kospi closed flat, with a slight gain of 0.42% to 1,912.08, while the Australian S&P/ASX 200 rose slightly by 0.35% to 5,034.50.
Analysts are predicting the Chinese manufacturing sector to shrink even more after reports revealed the struggling sector weakened further in July, contracting at a faster-than-expected a pace.
The preliminary reading for the month of July stood at 47.7, revealing the weak economic slowdown. Reading below 50, indicates contradiction.
The preliminary reading released by HSBC Holdings Plc and Markit Economics was lower than expected and if it’s confirmed in the ports to be released on August 1st, it would be the lowest in 11 months.
“The recent survey suggests a continuous slowdown in manufacturing sectors, thanks to weaker new orders and faster destocking. This adds more pressure on the labor market,” Chief economist of China economic research at HSBC Hongbin Qu wrote in a note following the readings released.
“As Beijing has recently stressed to secure the minimum level of growth required to ensure stable employment, the flash PMI reinforces the need to introduce additional fine-tuning measures to stabilize growth,” Qu wrote.
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