Mainland China share market finished session in negative territory on Wednesday, 05 June 2024, dragged lower by consumer and property shares. However, market losses capped after latest data showing an unexpected pickup in service activity in May pointing to sustained recovery in the second quarter.
At close of trade, the benchmark Shanghai Composite index declined 0.83%, or 25.80 points, to 3,065.40. The Shenzhen Composite Index, which tracks stocks on China's second exchange, was down 1.19%, or 20.59 points, to 1,706.33. The blue-chip CSI300 index decreased by 0.58%, or 20.88 points, to 3,594.79.
ECONOMIC NEWS: China Service Sector Accelerates in May- The services sector in China continued to expand in May, and at a faster pace, the latest survey from Caixin revealed on Wednesday with a services PMI core of 54.0. That's up from 52.5 in April and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Underpinning the latest acceleration in services activity growth was faster new business inflows. Incoming new work increased at the quickest pace since May 2023 and solid overall. Likewise for export business, the rate of expansion was the most pronounced in a year. Anecdotal evidence pointed to improvements in domestic and external market conditions, alongside the launch of new products as factors helping to drive the rise in new work. As a result of growth in new business and activity, staffing levels expanded for the first time in four months. The rate of employment growth was marginal, but the fastest since September 2023.
China's Private Sector Activity Hits 13-Month High- China's Caixin General Composite PMI rose to 54.1 in May 2024 from 52.8 in April, marking the highest reading since May 2023. This was the seventh consecutive month of growth, driven by accelerated output in both manufacturing and services. A faster increase in new orders, especially in services, led to a marginal rise in employment for the first time in nine months. Input costs hit a 23-month high, and output charges saw the most significant gain in seven months. However, sentiment weakened due to reduced service sector confidence amid rising costs.
CURRENCY NEWS: China?s yuan eased against the dollar on Wednesday, inline with weaker official guidance rate set by country's central bank. Prior to the market's opening, the People's Bank of China set the midpoint rate at 7.1097 per U.S. dollar, 14 pips weaker than the previous fix 7.1083. In the spot market, the onshore yuan CNY=CFXS yuan opened at 7.2399 per dollar and was changing hands at 7.2450 at midday, 48 pips weaker than the previous late session close and 1.90% away from the midpoint.
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