Investors Reacted to Data Releases in Australia and China

Stocks in Asia-Pacific were mostly higher on Thursday, as investors digested the information that came from Australia as well as China.

South Korea’s Kospi led gains regionally as it gained 1.1% in afternoon trade.

In Japan, the Nikkei 225 advanced 0.47% and the Topix index added 0.83%.

Shares in Australia also rose on Thursday, with the S&P/ASX 200 climbing 0.44%. The country’s retail sales rose 1.1% month-on-month in April on a seasonally adjusted basis according to data released by Australia’s Bureau of Statistics.

MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.33%.

On Wednesday, stocks on Wall Street saw gains on the day. The Dow Jones Industrial Average added 25.07 points to 34,600.38. Meanwhile, the S&P 500 gained 0.14% to 4,208.12. The Nasdaq Composite advanced 0.14% to 13,756.33.

Investors and Chinese stocks

Investors are closely monitoring the information that comes from one of the largest economies in the world. Mainland Chinese stocks were higher by the afternoon, with the Shanghai composite advancing 0.38%. The Shenzhen component added 0.45%. Hong Kong’s Hang Seng index dropped 0.4%.

The country’s services sector expansion slowed in May, a private sector survey showed on Thursday. The Caixin/Markit services Purchasing Managers’ Index (PMI) declined to 55.1 in May down from 56.3 in April. Nonetheless, it is still in expansionary territory. The 50-mark differentiates growth from contraction on a monthly basis.

The survey attributed part of the slowing expansion to a decline in overseas demand as Covid-19 cases abroad hurt business activity. A measure of export orders slipped into contraction.

The Caixin/Markit PMI contrasts with an official survey released earlier this week. The official survey showed activity in the country’s sector expanded at a faster pace in May.

Though slower to recover from the Covid-19 pandemic than manufacturing, a gradual improvement in consumption boosted activity in China’s services sector, which includes many smaller and private companies.

The survey also revealed another interesting fact. Growth in total new orders dropped and services firms increased their staffing levels for the third straight month.

Inflation pressure aggravated with input costs rising at a sharper rate in May. Reports of more expensive raw materials, energy, staff, and transport, also affected the situation. The companies were able to raise selling prices for the 10th straight month, but the increases have yet to catch up with the inflation in input costs.

The Caixin China General Composite PMI came in at 53.8 last month, weaker than 54.7 in April.