Monthly surveys showed Chinese manufacturing output rose in November, defying expectations of a decline. That helped to buoy sentiment as investors wait for a U.S.-Chinese trade deal ahead of a Dec. 15 deadline for a tariff hike. U.S. legislation on Hong Kong threatens to disrupt the negotiations.
The uptick in Chinese activity “has triggered some optimism,” said Vishnu Varathan of Mizuho Bank in a report. However, “caution may be the flavor of the month” until investors see what happens with U.S. tariffs, said Varathan.
London’s FTSE 100 was up 0.5% at 7,385.82 and Germany’s DAX gained 0.6% to 13,315.31. France’s CAC 40 added 0.6% to 3,940.39. On Wall Street, futures for the benchmark Standard & Poor’s 500 and Dow Jones Industrial Average were up 0.4%.
On Friday, the S&P 500 dropped 0.4% but ended the week up after hitting all-time highs three times. The Dow fell 0.4% and the Nasdaq Composite Index slide 0.5%. In Asia, Shanghai Composite Index closed up less than 1 point at 2,872.61 and Tokyo’s Nikkei 225 added 1% to 23,529.50. Hong Kong’s Hang Seng gained 0.4% to 26,444.72.
Seoul’s Kospi advanced 0.2% to 2,091.92 and Sydney’s S&P-ASX 200 was 0.2% higher at 6,862.30. India’s Sensex shed 14 points to 40,777.89. New Zealand declined while Taiwan declined. Southeast Asian markets were mixed.
Surveys by an official Chinese trade group and a major business magazine showed unexpectedly strong factory activity. Caixin magazine said its purchasing managers’ index rose to a two-year high of 51.8 from October’s 51.7 on a 100-point scale on which numbers above 50 show activity expanding.
A separate survey by the China Federation for Logistics & Purchasing rose to 50.2 from 49.3. The return to expansionary territory “strengthened the case for a short-term growth stabilization,” said Citigroup economists in a report.
Investors have grown cautious about lack of results from U.S.-Chinese talks on terms of the “Phase 1” deal announced by President Donald Trump in October amid negotiations aimed at ending a costly tariff war.
Washington is due to raise tariffs on $160 billion worth of Chinese products, including smartphones and laptops, as of Dec. 15. Trump expressed concern negotiations might be affected by legislation he signed last week that is intended to buttress Hong Kong’s status as a semi-autonomous Chinese territory amid tension over anti-government protests.
The measure could alter treatment of Hong Kong as a separate territory for trade if the State Department determines it no longer has enough autonomy from the Chinese mainland. Investors worry the measure “at least complicates the negotiations even if an eventual deal is not derailed,” said Mizuho’s Varathan.
Elsewhere, South Korea reported November exports fell for a 12th month in November, contracting 14.3% from a year earlier due to weak global demand and the U.S.-Chinese tariff war. ENERGY: Benchmark U.S. crude rose 97 cents to $56.14 per barrel in electronic trading on the New York Mercantile Exchange. It lost $2.94 the previous session to $55.17. Brent crude, used to price international oils, rose 90 cents to $61.39 per barrel in London. It fell $2.78 the previous session to $60.49.
CURRENCY: The dollar gained to 109.69 Japanese yen from Friday’s 109.48 yen. The euro slipped to $1.1017 from $1.1019.