Asia Stocks Perk up as US Service Companies Expand
Asian stock markets perked up Wednesday after US service companies, which employ most of the American workforce, grew at a slightly faster pace in May.
The result provided some relief for markets following a slew of dismal economic data, including a disappointing US jobs report and a slowdown in Chinese manufacturing, that intensified fears of a global economic recession.
On Tuesday, the Institute for Supply Management said its index of non-manufacturing activity edged up to 53.7 last month from an April reading of 53.5. That is important because US service companies employ roughly 90 percent of American workers. It marked the 29th straight month of expansion for the sector.
While a reading above 50 indicates expansion, analysts remained cautious about reading too much into the latest figure.
“Any improvement is good and growth is growth but 53.7 still falls short of the 55 mark that we’ve always regarded as the dividing line between earnest growth and aimless drifting,” analysts at DBS Bank Ltd. in Singapore wrote in an email.
“Given the downside surprises in every other data point that comes to mind over the past month, the May outcome was taken well by the markets.”
Traders also said a decision by the Reserve Bank of Australia on Tuesday to lower its benchmark interest rate by a quarter percentage point to 3.5 percent stoked hopes that central banks elsewhere would do the same.
Japan’s Nikkei 225 rose 1 percent to 8,467.78 and Hong Kong’s Hang Seng added 0.8 percent to 18,397.40. Australia’s S&P/ASX 200 edged 0.3 percent up to 4,056.10. Benchmarks in mainland China, Singapore and Taiwan also rose.
Finance ministers and central bank presidents from the world’s seven wealthiest nations held an emergency conference call Tuesday to discuss ways to deal with Europe’s debt crisis.
Leaders are worried that Spain and Cyprus, which are scrambling for money to prop up their troubled banks, will soon need to be bailed out by their richer counterparts.
But the call didn’t yield a blueprint for action, at least not publicly. More clarity is expected later this month, after Greece holds elections June 17.
In the US, trading volume was light and the stock moves were small. The Dow Jones industrial average rose 0.2 percent to 12,127.95, trading within a range of 75 points — one of the narrowest of the year. The Standard & Poor’s 500 index closed marginally higher at 1,285.50. The Nasdaq composite index rose slightly to 2,778.11.