Asian Shares Higher in Early Trade after Private China PMI Data; Aussie Traders Await RBA Policy Decisions

The major Asia Pacific stock indexes are trading mixed but mostly higher at the mid-session on Tuesday after a private survey showed Chinese manufacturing activity in August expanding at its fastest pace in nearly 10 years.

Earlier in the session, Asian stocks traded lower following a softer performance on Wall Street while the U.S. Dollar slipped as markets digested new Federal Reserve comments that suggested rates will stay low for an extended period.

Private Survey Shows China’s Manufacturing Sector Expanded in August

Results of a private survey on Tuesday showed China’s manufacturing activity expanded in August at the fastest pace in nearly a decade.

The Caixin/Markit manufacturing Purchasing Managers’ Index (PMI) came in at 53.1 for August, compared to 52.8 in July. Economists polled by Reuters had expected Caixin/Markit manufacturing PMI to come in at 52.7.

The expansion in August was the fastest since January 2011, Caixin and IHS Markit said in their joint report.

“Manufacturing demand and supply continued to recover, and overseas demand started to pick up,” wrote Wang Zhe, a senior economist at Caixin Insight Group.

In August, “the subindices for output and total new orders again hit their highest levels since January 2011,” the report said. The gauge for new export orders also entered expansionary territory for the first time this year, as the coronavirus outbreak slowed overseas, added Wang.

On Monday, China’s National Bureau of Statistics reported that official manufacturing PMI for the month of August came in at 51.0, slightly missing analysts’ expectations for a 51.2 reading.

Japan Economic Releases

Japan’s Unemployment Rate came in at 2.9%, higher than the previous month, but better than the forecast. Capital Spending fell 11.3%, much worse than the -4.0% forecast. Final Manufacturing PMI improved to 47.2, up from 46.6 and better than forecast.

Dollar Dump Continues, Aussie Traders Look Toward RBA Decisions

The U.S. Dollar fell toward multi-year lows against most major currencies on Tuesday as the Federal Reserve’s new policy framework continued to fuel bets that U.S. rates will stay lower for longer than other countries.

The Australian Dollar held around a two-year high against the greenback as traders wait for news from a Reserve Bank of Australia (RBA) policy meeting later on Tuesday to gauge policymakers’ views on the economy.

The RBA is not expected to make any major changes at a policy meeting on Tuesday, but traders want to see how central bankers assess the economic outlook as the country grapples with a recent increase in coronavirus cases.

For a look at all of today’s economic events, check out our economic calendar.