focus on Caixin PMI, dollar, US data

The Caixin China manufacturing PMI for August came in at a six-month high of 51.6, topping a Reuters analyst poll. The private survey had been expected to show a slight dip to 50.9 in August from 51.1 in July, according to a Reuters poll.

The better than expected Caixin manufacturing PMI came a day after official numbers also came in above expectations at 51.7, reflecting a rise in Chinese manufacturing activity in August.

Major news from the U.S. included Treasury Secretary Steven Mnuchin saying that a “very detailed” tax plan had been prepared by President Donald Trump’s administration. In the Thursday interview with CNBC, Mnuchin also said the plan had been introduced to Congress and will be shown to the public at the end of September.

Given how markets appeared to have priced out the Trump administration following through on reform proposals, progress on the tax front will likely be viewed positively, said ANZ Economist Daniel Gradwell in a note. Still, “markets seem to be taking a skeptical view for now,” he noted.

Investors stateside also digested inflation and consumer spending figures released Thursday. Consumer spending rose 0.3 percent in July, below the 0.4 percent forecast, Reuters said. Meanwhile, the personal consumption expenditures price index rose 1.4 percent compared to the previous year, below the 1.5 percent rise seen in June.

Major indexes on Wall Street rallied overnight, with the Dow Jones industrial average rising 0.25 percent, or 55.67 points, to close at 21,948.10.

The dollar remained on the back foot against a basket of currencies after edging down overnight following U.S. data releases. The currency’s slide also followed Mnuchin’s comment that a softer dollar was better for the U.S. on the trade front. The dollar index stood at 92.620 at 9:51 a.m. HK/SIN after falling as low as 92.561 overnight. The dollar had earlier traded above the 93 handle on Thursday.

Meanwhile, the greenback clawed back losses against the yen, with the dollar last fetching 110.10 yen after falling as low as 109.91 overnight.

The dollar/yen pair is likely to remain in focus when U.S. August nonfarm payrolls are released during American hours, said IG Chief Market Strategist Chris Weston in a note.

In corporate news, Toshiba missed an Aug. 31 deadline to secure an agreement over the sale of its memory business, Reuters said Thursday. The company will reportedly continue talks with three parties over the deal. Toshiba shares were up 0.65 percent.

Meanwhile, South Korea’s Lotte will borrow $300 million to prop up Lotte Mart operations in China and pay off loans, Korea Herald reported Thursday. A number of Lotte stores in China have been closed due to supposed code violations after a rift developed between the two countries over the deployment of a U.S. anti-missile system. Lotte Shopping shares tumbled 4.47 percent, leading losses among other South Korean retail stocks: Lotte Himart was down 1.61 percent and Shinsegae declined 1.3 percent.

On the energy front, the September U.S. gasoline contract settled up more than 13 percent overnight at $2.1399 a gallon as close to a quarter of U.S. refinery capacity stayed shuttered, Reuters said. The largest refinery in the U.S. could also be closed for up to two weeks due to floods after Tropical Storm Harvey, according to Reuters. The October contract was off 0.44 percent at $1.7714 a gallon.

Oil prices slid after settling almost 3 percent higher overnight. U.S. crude slipped 0.55 percent to trade at $46.97 a barrel and Brent crude shed 0.17 percent to trade at $52.77.

South Korean data released on Thursday also gave investors plenty to study. Although manufacturing activity contracted in August, the Nikkei/Markit PMI reading of 49.9 showed a move closer to the 50-mark that divides decline and growth, Reuters reported. Meanwhile, August exports rose 17.4 percent compared to a year ago and annual inflation in the month rose to its highest levels in 5 years, Reuters said.

— CNBC’s Huileng Tan contributed to this report.

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