Asian Stocks Fall After Data Shows Unexpected Dip In China Manufacturing Activity In October

Data pointing to a slowdown in Chinese factory activity pushed Asian stocks lower on Monday. Oil prices slumped, too, as new number released on Monday and over the weekend suggest China’s efforts to stimulate its economy haven’t worked.

The preliminary Caixin China manufacturing purchasing managers' index (PMI), a private-sector survey of Chinese factory activity, released Monday rose to 48.3 in October, recovering slightly from a 6 ½-year low hit in September. Over the weekend China released its official PMI, which came in at 49.8, the third consecutive month of manufacturing contraction.

“The reading was weaker than expected and the non-manufacturing index also wasn’t very good, so we may see some negative impact,” Shoji Hirakawa, chief equity strategist at Tokyo’s Okasan Securities Co., told Bloomberg.

These data points indicate that China’s factories are slowing their activity. As the world’s second-largest economy, a prolonged contraction could threaten to drag other economies down, especially those dependent on Chinese demands for raw materials. China’s economy has hit it slowest pace since 1990, and Beijing has been trying to rev up activity with stimulus measures, including a recent currency devaluation and drop in its interest rates.

Japan’s Nikkei 225 was down 1.61 percent to 18,777 in morning trading, pulling back from a two-month high on Friday. Hong Kong’s Hang Seng was down 0.99 percent to 22,416 while the mainland’s Shanghai Composite shed 1.26 percent to 3,340.

The lackluster manufacturing data also weighed on the Australian and New Zealand currencies. Both countries depend heavily on Chinese demand for raw materials.

Oil futures traders winced at the Chinese data, driving down prices for global crude. West Texas Intermediate crude oil, the U.S. benchmark for oil prices, gained 0.47 percent to $46.37 per barrel for December delivery on the New York Mercantile Exchange. On the London ICE Futures Exchange, Brent crude, the global benchmark for oil prices, lost 0.14 percent to $49.49.