China Stocks Drag Down Asia as New Year Begins: Markets Wrap

(Bloomberg) — Chinese shares dragged down Asian equities on the first trading day of the year following weaker-than-expected factory data and a speech from President Xi Jinping that flagged the headwinds facing the economy.

Most Read from Bloomberg

Hong Kong’s benchmark share gauge slid as much as 1.5%, while its mainland and Taiwan peers also dropped. Sentiment was also dented after ASML Holding NV, which makes semiconductor manufacturing equipment, canceled shipments of some of its machines to China at the request of US President Joe Biden’s administration, according to people familiar with the matter.

Official data from China over the weekend showed factory activity shrank in December to the lowest level in six months, while a private gauge of the manufacturing activity released Tuesday showed a slight gain. President Xi in his annual new year address televised Sunday pledged to strengthen economic momentum and job creation, while conceding some “enterprises had a tough time” and “people had difficulty finding jobs and meeting basic needs.”

China’s economy may face another tough year in 2024, said Mark Matthews, head of Asia research at Julius Baer. “President Xi has made it very clear that on the economic front, his priority is bringing down the size of the property sector and its importance in the economy,” he said on Bloomberg Television. “That process is painful.”

Oil rose after Iran dispatched a warship to the Red Sea in response to the destruction of three Houthi boats by the US Navy over the weekend, a move that risks ratcheting up tensions and complicating Washington’s goal of securing a waterway that’s vital to global trade.

Story continues

Futures contracts for US shares were little changed. The yen weakened against all its Group-of-10 peers in holiday-thinned trading as investors monitored conditions after an earthquake in Japan on Monday. The dollar was mixed. Ten-year Treasury futures dropped, while cash Treasuries are shut in…