Asian stocks have started 2024 in a flat-to-low range due to weak Chinese economic data and a destructive earthquake in Japan weighing investor sentiment.
Regional markets were largely poised for correction in January following robust gains through December, amid increasing expectations of an early 2024 interest rate cut from the Federal Reserve (Fed).
On the other hand, the US’s S&P 500 futures increased by 0.14% to $4,826.75 on Tuesday’s Asia session.
Investors’ confidence in Asian stock markets was also negatively impacted by a 7.6 magnitude earthquake in central Japan on Monday, which caused significant damage to some homes and suspended train services in the region.
The incident led to the deaths of at least 48 people, while rescue efforts had difficulty reaching isolated areas. The devastating earthquake has prompted coastal residents to evacuate due to tsunami waves hitting the country’s west coast.
Meanwhile, Japanese markets were shut for a week-long holiday. Futures for the Nikkei 225 index jumped by 0.40% to ¥33,413.00. However, the primary stock index, a top performer in 2023, fell 0.23% to ¥33,464.17 at the close.
Chinese Stocks Dip on Weak PMI Data
Chinese stocks continued to underperform compared to their counterparts, suffering significant declines from 2023. The latest official purchasing managers’ index (PMI) data indicated minimal improvement in business activity.
The blue-chip CSI 300 eased by 1.30% to CN¥3,386.35 on Tuesday, extending a 12.00% dip from last year and trading close to a five-year low due to weak PMI data.
The Shanghai Composite index slid by 0.43% to CN¥2,962.28, while Hong Kong’s Hang Seng fell by 1.55% to HK$16,784.00.
The country’s manufacturing PMI contracted further to 49.0 in December from November’s 49.4, while the average reading for 2023 also suggested a contraction. The non-manufacturing PMI, standing at 50.4, stayed close to contraction in the last month of the year.
Despite a private survey hinting at manufacturing resilience, overall growth stayed mostly modest due to continued offshore demand weakness for Chinese goods.
In 2023, China struggled with deflation and slow government stimulus, hindering a post-COVID economic rebound. That led investors to stay wary of Chinese markets, with sustained stock outflows through the year.
