Asia Markets Start December Lower as China PMI Misses and Crypto Warnings Hit Hong Kong

Gerik

Summary:

Asian markets opened December on a cautious note, dragged down by an unexpected contraction in China’s factory activity and fresh regulatory warnings on digital currencies...

Weaker China Manufacturing Data Dampens Sentiment

Markets across the Asia-Pacific region began December mostly in decline as investors reacted to disappointing economic signals from China. The private-sector RatingDog China General Manufacturing PMI, compiled by S&P Global, fell to 49.9 in November unexpectedly slipping into contraction territory and missing the 50.5 forecast in a Reuters poll.

This marks a continued struggle for China's manufacturing sector, despite recent hopes for stabilization. It follows official PMI data released a day earlier showing the manufacturing gauge rising slightly to 49.2, still below the 50 benchmark for the eighth straight month, signaling ongoing economic fragility.

The subdued data has raised fresh doubts about the sustainability of China's recovery amid tepid domestic demand and fading consumption momentum post-holidays. A contraction in services activity added to the concern, reinforcing a correlation between weak consumer confidence and slow industrial recovery.

Hong Kong Crypto-Exposed Stocks Plunge on PBoC Warning

Further weighing on sentiment in Hong Kong were new warnings from the People’s Bank of China (PBoC) about illegal activities tied to digital currencies and the re-emergence of speculative trading behaviors. The announcement, released over the weekend, prompted sharp declines in several crypto-linked financial firms:

Yunfeng Financial, backed by Jack Ma, fell more than 7%

Bright Smart Securities & Commodities Group also dropped over 7%

Guotai Junan lost up to 3%

This regulatory pushback highlights Beijing’s renewed focus on clamping down on crypto activity and introduces a direct cause for investor retreat from fintech and digital-asset-linked equities.

Diverging Performances Across Regional Markets

In Japan, the Nikkei 225 slumped 1.68% to 49,407.31, with Fujikura, Sumitomo Pharma, and Advantest among the steepest decliners, down over 4–8%. The Topix index also lost 0.72%, reflecting broader weakness across sectors.

Australia’s S&P/ASX 200 index declined 0.47% as cautious sentiment spread, while South Korea's Kospi fell 0.19%. However, the Kosdaq which typically features smaller tech and growth firms rose 1.29%, signaling investor appetite for speculative plays amid expectations of rate cuts.

U.S. Rate Cut Bets Lend Underlying Support

Despite weak Asian market openings, U.S. equity futures remained steady, buoyed by growing conviction that the Federal Reserve may cut rates at its December 10 meeting. According to CME FedWatch, markets are pricing in an 87.4% probability of a 25 basis point cut.

U.S. indices closed last week with gains in a holiday-shortened session. The Nasdaq Composite extended its winning streak to five days, closing up 0.65% at 23,365.69. The S&P 500 gained 0.54% to 6,849.09, while the Dow Jones added 289.30 points to settle at 47,716.42.

Mixed Macro Signals Set Uncertain Tone for Asia

The opening day of December has revealed a bifurcated regional performance. While China's disappointing PMI data and crypto clampdown in Hong Kong pulled down risk sentiment, U.S. rate-cut hopes and selective tech gains in South Korea provided some cushioning.

The divergence illustrates a market landscape where geopolitical risk, domestic policy shifts, and macroeconomic indicators are creating fragmented outcomes across Asia. Investors will be closely monitoring whether China rolls out further stimulus or regulatory adjustments to stabilize sentiment in the weeks ahead.

Source: CNBC

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