Asian stocks faltered Thursday as China's manufacturing weakened and the latest Fed minutes reminded investors that U.S. interest rates are likely to rise next year.
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KEEPING SCORE: Japan's Nikkei 225 inched up 0.1 percent to 17,306.29 while South Korea's Kospi slipped 0.6 percent to 1,955.27. China's Shanghai Composite dropped 0.1 percent to 2,448.65 and Australia's S&P/ASX 200 fell 1 percent to 5,317.50. Hong Kong's Hang Seng added 0.1 percent to 23,388.95 while markets in Southeast Asia fell.
CHINA FACTORIES: Manufacturing activity in China fell to a six-month low in November, reflecting sluggishness in the world No. 2 economy and weakness abroad, according to the preliminary version of HSBC's factory survey. The survey comes days after an official report showed that property prices softened in October in all but one of 70 cities tracked across China, falling 2.6 percent overall. Real estate had been a prime driver of China's blistering economic growth in previous years but recent weakness in prices suggests economic growth will continue to slip.
THE QUOTE: The manufacturing data shows how "choppy" China's economy is at present, said Stan Shamu, market strategist at IG in Melbourne, Australia. "Investors will have to exercise extreme caution and patience" before diving back into mining stocks which have weakened as China's economic growth wanes. "Waiting for a sustained recovery before buying stocks is always a better strategy than buying before knowing just how low they will trade."
FED MINUTES: The minutes of the U.S. Federal Reserve's last policy meeting released Wednesday showed that the Fed decided not to alter its wording on the timing of any interest rate increases. Fed officials worried that a change could be misinterpreted by financial markets. Most economists predict that the Fed won't raise rates before June. "Investors feel the Fed is continuing to pave the path toward tightening" of monetary policy, said IG's Shamu.
WALL STREET: U.S. financial markets pulled back slightly from their most recent record highs Wednesday, ending lower for the first time this week. The S&P 500 slipped 3.08 points, or 0.2 percent, to 2,048.72. The Dow fell 2.09 points, or 0.01 percent, to 17,685.73. The Nasdaq composite shed 26.73 points, or 0.6 percent, to 4,675.71. Seven of the 10 sectors in the S&P 500 declined, with telecommunications stocks dropping the most. Energy stocks managed the biggest gain.
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ENERGY: Benchmark U.S. crude was little changed as hopes for an OPEC production cut offset an Energy Department report showing that crude inventories increased far more than expected last week. The front-month contract was up 8 cents at $74.58 a barrel in electronic trading on the New York Mercantile Exchange. It dropped 3 cents to close at $74.58 on Wednesday.
CURRENCIES: The yen continued its slide amid unprecedented Bank of Japan monetary stimulus. The dollar was at 118.61 yen from 118.02 yen late Wednesday. The euro was little changed at $1.2547 from $1.2545.