Chefs social distance on June 18 while waiting to take a swab test for the coronavirus as officials conduct mass testing following a new cluster of cases last week in Beijing. Photo: AFP/Noel Celis

Hong Kong: Asian markets are cautious ahead of a bunch of PMI – purchasing managers’ index – data releases with investors already rattled by the spike in coronavirus cases.

Kicking off the day’s economic data releases, Japan’s manufacturing PMI, declined to 37.4 from 38.4 and services PMI jumped to 42.3 from 26.5.

“While the manufacturing PMI weakened a little further in June, the rebound in the services PMI has further to run as virus-related restrictions are eased,” said Marcel Thieliant, Senior Japan Economist at Capital Economics.

Australia’s PMI numbers for June showed the manufacturing PMI returning to 49.8, just short of the 50-threshold indicating growth, while the services PMI leapt to 53.2 from 26.9.

“Be very clear though, 53.2 – though marking a growing services environment – does not mean business as normal. If the difference between 50 and last month’s 26.9 index for services was an indication of how far service activity fell that month, June’s reading of 53.2 suggests that about one-eighth of that single month’s decline was clawed back,” Robert Carnell, ING Bank’s Regional Head of Research for Asia-Pacific, said.

Japan’s Nikkei 225 benchmark was down 0.55% and Australia’s S&P ASX 200 index was 0.74% lower. Hong Kong’s Hang Seng index has jumped 0.97% after the previous day’s slide on worries about a new security law, and China’s CSI 300 benchmark is marginally higher.

Overnight, the Dow Jones Industrial Average rose 0.59%, the S&P 500 gained 0.65%, and the Nasdaq Composite added 1.11%.

Credit markets

Credit markets are also cautious although the new issuance market remains busy with Chinese property developers Agile and Ronshine in the market with a tap of their existing bonds. The Asia IG index is wider by 3 basis points at 87/89 bps and sovereign CDS have moved out by 1-3 bps.

Later in the day PMI releases due from Germany, the EU, the US and the UK are expected to show similar trends as in Australia and Japan.

“The PMI surveys provided an early indication that the worst of the economic impact from the virus outbreak appears to have hit in April, with the global PMI staging a record rise in May, albeit remaining worryingly weak by historical standards,” Chris Williamson, Chief Business Economist at IHS Markit, said.

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This report appeared initially on Asia Times Financial.

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