Asia-Pacific stocks set for lower start as data show Chinese factory activity contracted in April

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SINGAPORE — Shares in Asia-Pacific looked set for a lower start Monday, with data released over the weekend showing Chinese factory activity contracted in April.

Futures pointed to a lower open for Japanese stocks. The Nikkei futures contract in Chicago was at 26,740, against the Nikkei 225 last close at 26,847.90.

Australia stocks also looked poised for a lower start, with the SPI futures contract at 7,315. That compared against the S&P/ASX 200’s last close at 7,435.

Chinese economic data released over the weekend may weigh on regional investor sentiment Monday. China’s factory activity contracted at a steeper pace in April as Covid lockdowns hit industrial production.

The official manufacturing Purchasing Managers’ Index for April declined to 47.4, a second straight month of contraction following with March’s reading of 49.5, data from the National Bureau of Statistics showed Saturday.

The 50-point mark in PMI readings separates growth from contraction. PMI readings are sequential and represent month-on-month expansion or contraction.

A private survey also showed contraction in Chinese factory activity, with the Caixin/Markit manufacturing PMI coming in at 46, declining from the previous month’s reading of 48.1.

“Omicron and the government’s zero-covid policy were the main culprits for China’s activity decline in April, halting industrial production and disrupting supply chains,” Rodrigo Catril of National Australia Bank wrote in a note.

“A sharp Chinese economic slowdown in the second quarter remains a realistic outcome at this stage and if history is any guide, global hit to growth would follow shortly after,” said Catril, a currency strategist at the firm.

The data come as mainland China has been grappling for weeks with its worst Covid outbreak since 2020.

Markets in Hong Kong, mainland China, Singapore and Taiwan are closed on Monday for a holiday.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 103.191 after a recent jump from levels below 102.4.

The Japanese yen traded at 130.02 per dollar, still weaker as compared with levels below 128 seen against the greenback last week. The Australian dollar was at $0.7069 after dropping from above $0.714 in the previous week.

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