Japan stocks lead losses in Asia-Pacific; private survey on Chinese manufacturing activity ahead

SINGAPORE — Shares in Asia-Pacific fell Friday morning following overnight losses on Wall Street, with investors looking ahead to the release of a private survey on Chinese manufacturing activity in March.

The Nikkei 225 slipped 1.29%, as shares of SoftBank Group dropped more than 2%, while the Topix index fell 1.2%.

Sentiment at Japan’s large manufacturers soured in the three months to March, according to the Bank of Japan’s quarterly tankan business sentiment survey. The headline index for large manufacturers’ sentiment came in at 14, a decline from the previous quarter’s reading of 17.

In South Korea, the Kospi dipped 0.65%. Australia’s S&P/ASX 200 shed around 0.2% in morning trade.

MSCI’s broadest index of Asia-Pacific outside Japan traded 0.22% lower.

Looking ahead, the Caixin/Markit manufacturing Purchasing Managers’ Index is set to be released at 9:45 a.m. HK/SIN.

Data released Thursday showed Chinese factory activity shrinking in March, with the official manufacturing PMI coming in at 49.5, below February’s reading of 50.2. The 50-point mark in PMI readings separates growth from contraction. PMI readings are sequential and represent month-on-month expansion or contraction.

The data comes as China battles its most severe Covid-19 outbreak since the pandemic began.

Overnight stateside, the S&P 500 dropped about 1.57% to 4,530.41. The Dow Jones Industrial Average slipped 550.46 points, or 1.56%, to 34,678.35. The Nasdaq Composite declined 1.54% to 14,220.52.

The losses on Wall Street came as the 2-year and 10-year U.S. Treasury yields briefly inverted for the first time since 2019, a move that is seen as a potential warning signal of recession ahead. The 2-year and 10-year spread was last in negative territory before pandemic lockdowns sent the global economy into a steep recession in early 2020.

The yield on the 2-year Treasury note last sat at 2.3547%, while the 10-year yield was at 2.3635%.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.318 following a recent bounce from levels below 98.

The Japanese yen traded at 121.80 per dollar, stronger than levels above 122 seen against the greenback yesterday. The Australian dollar changed hands at $0.7486, off levels around $0.747 seen yesterday.