China’s Caixin manufacturing PMI surprised markets by jumping to 52.8 in July from 51.2 in June, marking the highest point since February 2011. The official manufacturing PMI, which was released on Friday, also rose in July, to 51.1 from 50.9 in June. Japan’s factory activity contracted at the slowest pace in five months in July, while South Korea’s manufacturing activity data showed shrinkage was at a much slower pace last month, signalling that a gradual recovery in demand is gaining momentum on easing lockdowns. And Australia’s PMI rose to 54 points versus June’s 51.2, and its highest reading since December 2018. The Nikkei 225 leapt 2.24%, China’s CSI300 advanced 1.62% and Australia’s S&P ASX 200 ended flat.
Hong Kong’s Hang Seng Index benchmark retreated 0.56% weighed down by index heavyweight HSBC’s 4.4% slide as it warned that bad debts could surge, while reporting a surprise plunge in net profit. Safe havens gold and US Treasuries took a breather after their surge last month which saw the yellow metal climb 10% and the 10-year yield drop 12 basis points to 0.54%. And more gains are expected for gold. Credit markets extended their rally with the benchmark Asia IG index moving in 2 basis points to 71/72 basis points. This triggered a wave of issuance as CICC, KWG Group, Zhongtai Financial, Agricultural Development Bank and Yiwu State Owned Capital unveiled bond offerings.