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James Hyerczyk
Shanghai Index

The major Asia Pacific stock indexes finished mostly higher last week with the buying driven by stronger-than-expected manufacturing activity from China and optimism over a U.S.-China trade deal.

Stocks in major Asian markets saw gains on the first trading day of December as Chinese factory activity presented a positive surprise in November.

Last week, Japan’s Nikkei 225 Index settled at 23354.40, up 60.49 or +0.26%. South Korea’s KOSPI Index finished at 2081.85, down 6.11 or -0.29%  and Hong Kong’s Hang Seng Index closed at 26498.37, up 151.88 or +0.58%.

China’s Shanghai Index settled at 2912.01, up 40.03 or +1.39% and Australia’s S&P/ASX 200 Index finished at 6707.00, down 139.00 or -2.03%.

China’s Manufacturing Data Surprise

A private survey of Chinese factory activity in November came in stronger than expected on Monday, with the Caixin/Markit manufacturing Purchasing Managers’ Index for the month rising to 51.8. That was higher than expectations of a 51.4 reading by economists in a Reuters poll. The October PMI reading came in at 51.7.

Data released last weekend showed the official Purchasing Managers’ Index (PMI) was at 50.2 in November, according to China’s National Bureau of Statistics. That was beyond expectations of a November reading of 49.5 by analysts in a Reuters poll. The official PMI reading had come in at 49.3 in October.

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Australia Drops More Than 2%

The S&P/ASX 200 Index finished lower last week, having never recovered from a steep sell-off on Tuesday.

Shares in Australia fell last week following negative trade developments as U.S. President Donald Trump said that he will reinstate tariffs on U.S. steel and aluminum imports from Brazil and Argentina.

In other news, the Reserve Bank of Australia said it was keeping its main cash rate at a record low of 0.75%, a move that was in line with expectations from most analysts in a Reuters poll.

“The easing of monetary policy this year is supporting employment and income growth in Australia and a return of inflation to the medium-term target range,” said RBA Governor Philp Lowe in a statement.

Hong Kong October Retail Sales Slump Worst on Record as Protests Take Toll

Hong Kong investors shrugged off a weak retail sales report, focusing instead on upbeat Chinese data and optimism over a trade deal.

Hong Kong’s retail sales in October fell by their steepest on record, as ongoing anti-government protests that have gripped the Chinese-ruled city for nearly six months scared off tourists and hit spending.

Retail sales in October fell 24.3% from a year earlier, government data showed on Monday, against a revised 18.2% drop in September and 23% fall in August, as violent clashes spread across shopping districts and took a heavy toll on Malls and restaurants.

Japanese Stocks Post Marginal Weekly Gain

Japanese shares closed slightly better last week with most of the gains coming on Friday. The rest of the week was filled with choppy, two-sided trading.

In economic news, Japanese households cut their spending for the first time in almost a year in October as a sales tax hike prompted consumers to rein in expenses and natural disasters disrupted business.

Household spending dropped 5.1% in October from a year earlier, government data showed on Friday, down for the first time in 11 months and the biggest fall since March 2016.

Japan’s benchmark Nikkei stock index advanced Friday morning as the market mood was buoyed by rises on Wall Street and optimism that new stimulus measures would help prop up the Japanese economy.

The Japanese government approved 13.2 trillion yen ($121 billion) worth of public stimulus spending on Thursday, with the economy due for a total infusion of 26 trillion yen if private-sector and other outlays are factored in.

The package is meant to strengthen the economy against a possible cool-down period after the 2020 Tokyo Olympics and other risks such as the U.S.-China trade war.

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