Asia stocks uneven as China data, Japan policy weighed

Alicia Herrero, chief economist for Asia Pacific at Natixis, said in a note that China’s manufacturing PMI data would continue to slow while services would hold up marginally.

Elsewhere, oil-rich Canada’s dollar fell half a percent against its US counterpart CAD=D4 after the weak economic data dragged oil prices LCOc1 down from overnight highs as high as $36 a barrel. Southwestern Energy declined 32 cents, or 4 percent, to $8.57, Transocean dropped 60 cents, or 5.9 percent, to $9.82 and Chesapeake Energy fell 19 cents, or 6 percent, to $3.20.

CENTRAL BANKS: Analysts said after Japan’s central bank introduced a negative interest rate policy on Friday, central banks in other countries may add to stimulus or be more cautious about tightening policy.

Chinese shares got off to a halting start on Monday after an official measure of activity in the giant factory sector fell to its lowest since mid-2012, offering no respite from the economic drift that has dogged markets for months.

Stock markets and oil prices have been battered since the start of the year by concern the Chinese economy, the world’s second-largest, is struggling.

With eurozone consumer price inflation at only 0.4 percent last month, nowhere near the ECB’s target of around 2.0 percent, the European Central Bank is likely to cut its deposit rate even further into negative territory when it meets next month, a Reuters poll found last week.

January felt like a very long month for most involved with markets, given the continued worries regarding China and the volatility seen in many asset markets. The energy component of the S&P 500 fell almost 2 per cent, versus the almost flat performance of the broader market. First, the existing current account balances will now earn a 0.1 percent positive interest rate.

In contrast, the U.S. Federal Reserve has so far stuck to the script that it will gradually raise interest rates later this year. Stocks in Taiwan, Singapore, Indonesia and the Philippines also were lower.

The U.S. 10-year debt yield fell to 1.93 percent, edging near a double-bottom around 1.90 percent made in August-October, also helped by speculation Japanese investors will go after U.S. bonds as domestic bond yields plunge. Brent crude was down 49 cents to $33.76 in London.

In currency trading, the dollar ticked down to 120.85 yen from 120.96 yen Monday in NY.

The move, under which the BoJ will charge depositors a 0.1 per cent rate on commercial bank deposits, is expected to strengthen the Japanese real estate investment trusts (J-REITs), cut the cost of finance and, with the fall in the yen, boost offshore interest – particularly in sectors such as tourism.

It has bounced more than 30 percent from a 12-year low hit less than two weeks ago, taking some pressure off reeling global equity markets.