Stock market today: Asia sinks after a survey shows China’s industrial activity is weakening

By JOE McDONALD
AP Business Writer

BEIJING (AP) — Asian stock markets sank Wednesday after a measure of Chinese service industry activity fell to its lowest level this year.

Shanghai, Tokyo, Hong Kong and Sydney retreated. Oil prices were mixed.

U.S. markets were closed Tuesday for a holiday.

A service industry index by a leading Chinese business magazine, Caixin, weakened sharply in June, adding to signs China’s recovery following the end of anti-virus controls is cooling. Growth in factory activity also slowed.

“Without policy support, there’s a risk that weakening growth expectations could become self-fulfilling,” said Stephen Innes of SPI Asset Management in a report.

The Shanghai Composite Index fell 0.6% to 3,225.68 and the Hang Seng in Hong Kong sank 1.4% to 19,147.37.

Caixin’s purchasing managers’ index for services fell to 53.9 from May’s 57.1 on a 100-point scale on which numbers above 50 show activity increasing.

Tokyo’s Nikkei 225 lost 0.4% to 33,277.33 and the Kospi in Seoul retreated 0.4% to 2,583.13.

Sydney’s S&P-ASX 200 shed 0.3% to 7,254.50 and India’s Sensex opened down 0.2% at 65,384.86. New Zealand and Jakarta gained while Singapore and Bangkok declined.

China is the biggest trading partner for all of its Asian neighbors. Demand for imports got a boost when retailing and factory activity revived, but that rebound cooled faster than expected.

Economic activity accelerated to 4.5% in the first three months of 2023 from last year’s 3%. China’s No. 2 leader, Premier Li Qiang, said last month growth was improving. He gave no details but expressed confidence China can hit this year’s official growth target of “about 5%.”

Traders are uneasy about U.S.-Chinese tensions over technology trade after Beijing this week announced restrictions on exports of gallium and germanium, two metals used in making semiconductors and solar panels. That came ahead of Treasury Secretary Janet Yellen’s visit this week as part of U.S. efforts to restore strained relations.

In energy markets, benchmark U.S. crude rose $1.11 to $70.90 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oil trading, lost 43 cents to $75.82 per barrel in London.

The dollar rose to 144.62 yen from Tuesday’s 144.46 yen. The euro was unchanged at $1.0870.