Asian Stock Market: Mixed trading ahead of the key US PCE data

Asian stock markets trade mixed on Thursday as investors await the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred gauge of inflation ahead of the highly anticipated Nonfarm Payrolls for August. At press time, China’s Shanghai is down 0.60% to 3,117, the Shenzhen Component Index falls 0.44% to 10,416, Hong Kong’s Hang Sang declines 2.02% to 18,401, South Korea’s Kospi is down 0.43% and Japan’s Nikkei is up 0.77%. 

In China, manufacturing activity and the services sector deteriorated further this month, which is likely to put more pressure on authorities to move forward with stimulus measures to revive the economy. The National Bureau of Statistics (NBS) showed on Thursday that the Chinese Manufacturing Purchasing Managers' Index (PMI) improved to 49.7 in August from 49.3 in July, but below the market consensus of 49.4. This is the fifth consecutive month that the figure came in below the 50 threshold, which indicates the contraction zone. Meanwhile, the NBS Services PMI decreased to 51.0 51.5 prior and the expectation was at 51.1.  

Earlier on Thursday, the People’s Bank of China (PBOC) announced that they will continue to increase loans to private enterprises as part of their efforts to stimulate the private sector economy.

In Japan, Bank of Japan (BoJ) Board member Toyoaki Nakamura stated on Thursday that policymakers need more time to transition to monetary tightening. The data from the Japanese docket showed that Retail Sales rose by 6.8% YoY in July versus 5.6% prior, better than the expectation of 5.4%. While, Industrial Production dropped by 2.0% MoM in July from a rise of 2.4% in the previous month, compared to market consensus of a 1.4% drop.

On the Indian front, India’s annual Gross Domestic Product (GDP) for the first quarter will be released later on Thursday. The growth number is expected to grow by 7.7% compared to the previous reading of 6.1%. 

Looking ahead, the US Core Personal Consumption Expenditure Price Index (PCE), the weekly Jobless Claims, and the Chicago PMI will be released later in the day. On Friday, market participants will closely watch the release of Chinese Caixin Manufacturing PMI for August and the US Nonfarm Payrolls data.