Asian stocks fell Monday on weaker Chinese manufacturing and lower oil prices as investors looked ahead to U.S. data on factory output and employment.
KEEPING SCORE: The Shanghai Composite Index fell 1.6 percent to 3,603.59 points and Hong Kong's Hang Seng shed 1 percent to 24,398.91. Tokyo's Nikkei 225 declined 0.5 percent to 20,485.56 and Seoul's Kospi lost 0.8 percent to 2,013.43. Australia's S&P ASX 200 retreated 0.5 percent to 5,673.30 and Taiwan, Singapore and Jakarta also declined. On Friday on Wall Street, the Dow Jones industrial average lost 0.3 percent and the Standard & Poor's 500 index shed 0.2 percent while the Nasdaq composite was little changed.
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CHINESE MANUFACTURING RETREAT: Two surveys showed Chinese manufacturing weakened in July. The Caixin purchasing managers' index — previously sponsored by HSBC Corp. — declined to a two-year low of 47.7 from June's 49.4 on a 100-point scale on which numbers below 50 indicate activity contracting. A separate index by a Chinese industry group, the Federation of Logistics & Purchasing, and the government statistics bureau declined to 50 from June's 50.2. The bigger decline in the Caixin index suggests weakness was concentrated in private and smaller companies, which make up a bigger share of the group surveyed for that report.
ANALYST'S TAKE: "China will have several hard questions asked of it over the week, feeding into the concern it's facing a hard landing," said Evan Lucas of IG Markets in a report.
ENERGY STOCKS DECLINE: A downturn in oil prices dragged down energy stocks. On Wall Street, shares of Exxon Mobil and Chevron, the two largest publicly traded energy companies, fell roughly 5 percent each on Friday. Both companies posted major declines in their year-over-year profits largely due to the big drop in the price of oil. Energy companies have been a major drag on corporate earnings. S&P 500 companies are on track for a 1.3 percent decline in quarterly earnings from a year earlier, according to FactSet. If energy were excluded, corporate profits would be up 5.4 percent.
U.S. OUTLOOK: Investors were looking ahead to surveys of manufacturing and consumer spending due out Monday, factory orders Tuesday and data on employment and payrolls on Friday. The Labor Department reported Friday that U.S. wages and benefits grew at their slowest pace in 33 years in the spring. That suggests companies are able to find workers without boosting pay, which could cause the Federal Reserve hold off any increase in interest rates.
ENERGY: Benchmark U.S. crude shed another 33 cents to $46.79 per barrel in electronic trading on the New York Mercantile Exchange. The contract tumbled $1.40 the previous session to close at $47.12. Brent crude, used to price international oils, retreated 34 cents to $51.87 in London after dropping $1.10 to $52.21 the previous day.
CURRENCY: The dollar strengthened to 123.99 yen from Friday's 123.91. The euro was unchanged at $1.1010.