Chinese stock market soared as the contraction in the manufacturing sector was smaller than expected, prompting crypto enthusiasts to turn their attention to A-shares.

Table of Contents

Chinese Stock Market Surges, Manufacturing PMI Contracts Less Than Expected

In September, China's official Purchasing Managers' Index (PMI) recorded 49.8, indicating that although manufacturing activities have been contracting for five consecutive months, the extent was not as severe as anticipated. The private Caixin Manufacturing PMI, compiled by S&P Global, showed the index dropping from 50.4 last month to 49.3 in September, marking the largest decline in 14 months.

Positive Response in Chinese and Hong Kong Stock Markets

Following the economic data release, China's mainland Shanghai Shenzhen 300 Index rose by 8.5%, while Hong Kong's Hang Seng Index increased by 3.8%. Strong performance in consumer stocks drove the market up. Notably, the Hang Seng China Enterprises Index surged by 9.7%, indicating that investor sentiment remains high despite the slowdown in manufacturing growth. However, it is important to mention that due to the upcoming "Golden Week" holiday, the Chinese stock market will only open on Monday this week and remain closed for the rest of the week.

Crypto Enthusiasts Turn to A-Shares

Amid the surge in the Chinese stock market, many cryptocurrency investors, who were previously involved in meme coins and the cryptocurrency circle, are shifting back to the familiar stock market. They believe that cryptocurrencies are not performing well and consider them to be like a fleeting dream.

Nikkei Index Plunges Due to Weak Economic Data

Meanwhile, the Japan's Nikkei 225 Index experienced a significant decline, primarily driven by losses in real estate stocks. Department store holding company Isetan Mitsukoshi Holdings became the stock with the largest decline in the index, dropping by 11%. Additionally, the broader TOPIX Index also fell by 3.3%.

Further economic data in Japan added pressure to its market. Industrial output in August saw a year-on-year decline of 4.9%, significantly widening from the 0.4% drop in the previous month. On a month-on-month basis, the decline reached 3.3%, far exceeding Reuters' prediction of 0.9% and showing a sharp contrast to the 3.1% growth recorded in July.

Changes in Japan's political landscape have also captured investors' attention. Fumio Kishida won the Liberal Democratic Party election and is set to succeed Yoshihide Suga as Japan's Prime Minister. The market is currently observing how this leadership change will impact Japan's future economic policies.

Dow Jones Index Hits New High on Inflation Data Stimulus

The U.S. market showed mixed performance overnight, with the Dow Jones Industrial Average hitting a new high last Friday, rising by 0.33% to close at 42,313.00 points. The S&P 500 Index slightly fell by 0.13%, while the Nasdaq Composite Index dropped by 0.39%.

This volatility occurred as U.S. traders analyzed positive inflation data for August. The Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation gauge, rose by 0.1%, in line with economists' expectations surveyed by Dow Jones. On an annual basis, PCE increased by 2.2%, slightly below the predicted 2.3%, indicating some progress in inflation control.