The major Asia-Pacific stock indexes posted strong gains on Tuesday after taking an end-of-the-month breather the previous session. Buyers were aggressive the first day of the new month, helped by the release of a private survey of China’s manufacturing activity. The news comes on the heels of Monday’s official manufacturing PMI for November that came in at the highest reading in more than three years.
In the cash market on Tuesday, Japan’s Nikkei 225 Index settled at 26787.54, up 353.92 or 1.34%, Hong Kong’s Hang Seng Index finished at 26567.68, up 226.19 or +0.86% and South Korea’s KOSPI Index closed at 2634.25, up 42.91 or +1.66%.
In China, the Shanghai Index settled at 3451.94, up 60.18 or +1.77% and Australia’s S&P/ASX 200 Index finished at 6588.50, up 70.70 or +1.08%.
China’s Factory Activity Growth Hits Decade High in November as Economy Recovers
Activity in China’s factory sector accelerated at the fastest pace in a decade in November, a business surveyed showed on Tuesday, as the world’s second-largest economy recovers to pre-pandemic levels.
The Caixin/Markit Manufacturing Purchasing Managers’ Index PMI rose to 54.9 from October’s 53.6, with the gauge staying well above the 50-level that separates growth from contraction for the seventh consecutive month. Analysts polled by Reuters had forecast the headline reading would slip to 53.5.
The Caixin PMI reading was the highest since November 2010, and comes after an official gauge of factory activing, focusing more on larger and state-owned firms, rose at the fastest pace in over three years.
“Manufacturing continued to recover and the economy increasingly returned to normality as fallout from the domestic COVID-19 epidemic faded,” Wang Zhe, senior economist at Caixin Insight Group, wrote in a note accompanying the survey release.
RBA Holds Rates Near Historical Lows
The Reserve Bank of Australia (RBA) held rates at near-zero in a widely expected move on Tuesday as easy monetary and fiscal policies propped up the coronavirus-hit economy, fueling demand for homes and boosting construction activity.
In a short post-meeting statement, Governor Philip Lowe sounded optimistic about a recovery as the country has confidently reopened with almost zero new coronavirus cases.
“The economic recovery is under way and recent data have generally been better than expected,” Lowe said.
“This is good news, but the recovery is still expected to be uneven and drawn out and it remains dependent on significant policy support.”
Lowe also reiterated the board was unlikely to raise the cash rate for at least three years and was prepared to do more if necessary.
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