HONG KONG: Asian stocks traded cautiously in early deals on Wednesday, following losses on Wall Street and in Europe, and as oil prices dipped ahead of an OPEC meeting in Vienna this week.
Traders were wary despite positive economic data from China and Australia, while in Tokyo they awaited a decision from Prime Minister Shinzo Abe on whether or not to delay a consumption tax rise.
Global equity markets pulled back overnight as a spate of economic news looms, with investors awaiting a closely watched May US jobs report and the European Central Bank meeting.
Investors also weighed a batch of US data for further hints when to expect a rate hike, with reports showing rising home prices and a sharp jump last month in consumer spending but a dip in consumer confidence.
“Equity markets seem unimpressed by the recent data releases as both US and European markets all close(d) in the red. Asian markets do not look like they are heading for a better session,” said Angus Nicholson at IG Markets.
Sydney was down 1.2 percent even as Australia released data showing its economy expanded by a stronger-than-expected 1.1 percent in January to March, driven by exports and household spending.
Energy and mining stocks took a hit as oil prices fell, with West Texas Intermediate retreating three cents at $49.07 and Brent down 15 cents to $49.74 a barrel ahead of an OPEC meeting in Vienna Thursday.
Crude prices have rebounded from their January lows of under $30 a barrel, easing some of the pressure on the producers group to cut output, but are still a fraction of their 2014 peaks.
In Tokyo, profit-taking also set in after five straight positive sessions and as the yen strengthened against the dollar, with the Nikkei down 0.6 percent by the break.
“Investors may take profits after Japanese stock markets rose for five days,” Chihiro Ohta, a senior strategist at SMBC Nikko Securities Inc in Tokyo, told Bloomberg News.
“Now is not the time to buy actively. We have events such as the OPEC meeting, the ECB policy decision and the US jobs data coming up.”
China manufacturing expands
Investors are awaiting a decision from the prime minister on whether to hold off on a consumption tax hike, with Abe expected to announce a delay of two and a half years at a press conference later on Wednesday.
But Japanese mobile carrier SoftBank climbed on news that it will sell at least $7.9 billion of its stake in Chinese e-commerce giant Alibaba.
SoftBank will reduce its 32.2 percent holding in the Chinese company to about 28 percent with the sale, and use the proceeds to pay down its debts, the company said in a statement.
Chinese stocks, meanwhile, hovered around the flatline in early trade as official figures from Beijing showed manufacturing activity expanded in May for the third straight month.
Hong Kong was slightly up, adding 0.1 percent, while Shanghai was flat after surging on Tuesday.
The official Purchasing Manager’s Index (PMI), which tracks activity in the country’s factories and workshops, came in at 50.1, according to the National Bureau of Statistics.
Any reading above 50 signals expanding activity, while anything below indicates shrinkage.
China’s economy, the world’s second-largest, is a vital driver of global expansion, and investors watch the PMI figure closely as the first available indicator each month of how well the economy is doing.
The key manufacturing sector has been struggling for months in the face of sagging global demand for Chinese products.
Last year it grew at its weakest rate in a quarter of a century, and concerns it could be slowing further have taken stocks on a roller-coaster ride this year.
Key figures around 0245 GMT
Tokyo – Nikkei 225: DOWN 0.6 percent at 17,137.60
Shanghai – Composite: FLAT at 2,917.322
Hong Kong – Hang Seng: UP 0.1 percent at 20,836.30
Euro/dollar: DOWN at $1.1124 from $1.1131 on Tuesday
Dollar/yen: DOWN at 110.71 yen from 110.73 yen
New York – Dow: DOWN 0.5 percent at 17,787.13 (close)
London – FTSE 100: DOWN 0.6 percent at 6,230.79 (close)