China’s manufacturing purchasing managers’ index (PMI) rose slightly to 49.8, up from 49.7 in August.
Investors reacted positively to the data, with Asian stock markets soaring today (October 1st). Japan’s Nikkei 225 soared 2.2 per cent to 17,771.71, South Korea’s Kospi gained one per cent to 1,982.74 and Australia’s S&P/ASX 200 jumped 1.7 per cent to 5,105.80. Markets in Hong Kong and mainland China were closed for holidays.
Overnight on Wall Street, the tech-heavy Nasdaq Composite jumped 2.3 per cent, while the Dow Jones Industrial Average and the S&P 500 edged up 1.5 and 1.9 per cent respectively.
However, despite the steady data, the survey shows that factory activity in China continued to contract in September for the second consecutive month.
Yukino Yamada, senior strategist at Daiwa Securities, told MarketWatch that investors’ focus will be on China’s potential policy steps to boost its economy, expected to be announced after the National Day holidays.
“Once China’s consumption picks up steam, leading to higher commodity consumption and prices, weights on financial stocks may be removed and expectations may also increase that policy steps taken by many others countries will start working,” he said.
The data is the latest in a string of weak economic data highlighting the country’s struggling stocks, sluggish property market and weak demand at home and abroad.
The country’s central bank has cut interest rates five times since November in an effort to stabilise markets after suffering quasi-continued losses since June that wiped out more than £1.5 trillion.
It has also devaluated the renminbi on August 11th as part of an adjustment to make the currency’s exchange rate more market-driven.
A few weeks ago, the US Federal Reserve held off on an interest rate rise, citing an uncertain economic outlook in China and other emerging economies.
China’s economy expanded 7.4 per cent last year, its weakest since 1990, and has slowed further this year.
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