China Stocks mixed

The Mainland China equity market were mixed on Thursday, 06 September 2018, as demand for riskier assets muted amid lingering concerns about China's economic health after growth in China's services sector weakened again in August and fears of a further escalation in the U.S.-China trade war. Around afternoon trade, the benchmark Shanghai Composite Index rose 0.17%, or 4.51 points, to 2,708.85, while the Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.07%, or 1.04 points, to 1,441.21. The blue-chip CSI300 index declined 0.26%, or 8.57 points, to 3,289.57.

Trade-related concerns weighed on the market, with the ongoing trade war between the U.S. and China could intensify this week, with President Donald Trump reportedly saying over the weekend that he is ready to impose tariffs on an additional $200 billion worth of Chinese imports as soon as the public comment period ends on Thursday.

Growth in China's services sector weakened again in August as new business picked up only slightly from July's more than two-year low, a private survey showed yesterday. For August, the Caixin/Markit services purchasing managers' index (PMI) fell to 51.5, the lowest in 10 months, from July's 52.8. The 50-mark separates growth from contraction.

Government officials previously quoted a strong expansion in services as evidence of the economy rebalancing to more sustainable growth, though weaker consumer spending and a housing slowdown may be putting a dent in overall output. Labor-intensive services industries are taking on a more crucial for generating jobs as factories become more automated and rising costs in China push more manufacturers offshore. The threat of fresh tariffs from Washington could also add to pressure on factory jobs, as U.S. President Donald Trump's administration is set to decide on imposing duties on another US$200 billion of Chinese imports as early as this week.

Caixin's weaker reading on the services sector followed a separate survey Monday showing China's manufacturing activity grew at the slowest pace in more than a year in August, with export orders shrinking for a fifth month and employers cutting more staff.There were signs of rising upstream cost pressures in the services industry, yesterday's survey showed, as input prices rose significantly faster that prices charged. Both were up from July.

Caixin's composite PMI covering both the manufacturing and services sectors also declined in August, coming in at 52.0 compared with the previous month's 52.3. The composite index indicates that economic growth remained on a downward trajectory. Inflationary pressures were pronounced as increases in both input prices and output prices accelerated.

August's PMI readings indicated that the effects of expansionary credit policy and active fiscal policy are yet to kick in. Signs of stagnation emerged as upward pressure on prices remained even though demand weakened at a faster rate. .

OFFSHORE MARKET NEWS, US stock market closed softer on Wednesday, amid ongoing trade tensions between the U.S. and its key partners. The Dow Jones Industrial Average inched up 22.51 points or 0.1% to 25,974.99, while the Nasdaq tumbled 96.07 points or 1.2% to 7,995.17 and the S&P 500 fell 8.12 points or 0.3% to 2,888.60.

The major European stock markets ended down on Wednesday. The U.K.'s FTSE 100 Index slumped by 1%, while the German DAX Index and the French CAC 40 Index tumbled by 1.4% and 1.5%, respectively.

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