HONG KONG: Shanghai stocks tumbled Monday after two gauges of Chinese manufacturing activity showed contraction in January, while Asian markets were also hit by a sell off on Wall Street in response to disappointing US growth data.
Oil prices plunged again after enjoying a strong rally on Friday, while the euro ticked up, despite falling euro zone prices and ongoing concerns about Greece’s bailout face off with its international creditors.
Shanghai shed 1.38 percent in late afternoon and Hong Kong eased 0.42 percent, while Tokyo slipped 0.66 percent, or 116.35 points, to end at 17,558.04.
However, Sydney added 0.66 percent, or 36.98 points, to end at 5,625.30, while Seoul added 0.18 percent, or 3.42 points, to 1,952.68.
US dealers provided a negative lead after the Department of Commerce said Friday that the US economy expended at an annual rate of 2.6 percent in the fourth quarter, well below the 5.0 percent in the previous three months.
Adding to selling pressure was news that prices in the euro zone fell by a record 0.6 percent in January, fanning concerns that the currency bloc is facing years of deflation.
The Dow sank 1.45 percent, the S&P 500 lost 1.30 percent and the Nasdaq fell 1.03 percent.
Traders were also reacting Monday to news that China’s official purchasing managers index (PMI) of manufacturing actvity unexpectedly retreated last month for the first time since late 2012.
Data Sunday showed its PMI at 49.8 last month, against 50.1 in December.
Anything below 50 points to contraction and anything above indicates growth.
On Monday HSBC said its January PMI was 49.7, a tad up from 49.6 in December but still showing shrinkage.
The results are the latest to highlight the weakness of China’s economy, which in 2014 grew at its slowest pace in 24 years. However, it will fan talk of further monetary easing measures.