STO Santos Limited

Asian shares were broadly weaker Thursday as investors cautiously await the release of U.S. jobs data on Friday that could jolt markets out of their summer malaise.

Australia's S&P/ASX 200 was down 0.2%, South Korea's Kospi fell 0.5%, and Japan's Nikkei Stock Average traded up 0.1%.

"There's not much action," said Tareck Horchani, deputy head of Asian Pacific sales trading at Saxo Capital Markets Pte. "The main thing really will be the U.S. nonfarm payrolls tomorrow. The market is positioned for that."

Trading volumes across Asia, particularly in Japan and China, remained well below 100-day moving averages for most of August, as summer holiday absences and unmet expectations of monetary easing contributed to reduced volatility and a slower trading season. The start of the fall season and key economic data points from the U.S. could change that, analysts said.

A recent report from payroll processor ADP, which showed that private U.S. employers continued to hire at a solid clip in August by adding 177,000 workers, raised hopes for a strong showing in U.S. nonfarm payrolls, the next test of the likelihood of an interest rate rise.

Investors remain concerned, however, that higher U.S. rates could lead to capital outflows from Asia's emerging markets, though analysts say that economic fundamentals in the region are still strong.

Elsewhere, energy stocks in commodity-reliant economies were hard hit after Brent crude, the global oil benchmark, hit a three-week low. The U.S. Energy Information Administration said overnight that U.S. stockpiles of crude oil and refined products jumped by 4.5 million barrels in the week ended Aug. 26 to more than 1.4 billion barrels.

In Australia, shares of oil producer Santos Ltd. were down 2.1%, while Woodside Petroleum Ltd. was off 1.5% and Oil Search Ltd. fell 1.5%, dragging down the overall performance of the benchmark index.

Among other energy-focused markets, the FTSE Bursa Malaysia Index was last down 0.4%. Oil prices attempted to claw back gains, but analysts say they are skeptical about sustainable areas of price support in the heavily oversupplied market.

Earlier on Thursday, China released manufacturing data for August, with the official purchasing managers index coming in at 50.4, versus 49.9 in July, the highest in 22 months and indicating a slight expansion in the economy. The reading came in above the 50.0 level that indicates economic expansion.

The Caixin China manufacturing purchasing managers index, a private gauge of nationwide factory activity, fell to 50.0 in August from 50.6 in July but still showed an expansion, albeit at a slower pace.

Still, the August data helped turn losses into gains in Hong Kong, with the Hang Seng Index rising 0.2%. However, investor excitement was lacking in mainland China, with the Shanghai Composite Index falling 0.2% and the Shenzhen Composite Index also down around that much.

"It seems that the market is reacting to this as can be expected, because hopes for more policy stimulus will be lower" following the improved data, said Daniel So, a strategist at China Merchants Bank International.

The main driver of the Hang Seng Index on Thursday was banking giant HSBC Holdings, which was last up 2.4%. Mainland Chinese investors continued to pile into the blue-chip lender via the Shanghai-Hong Kong Stock Connect platform, boosting its share price. The upward momentum wasn't expected to last, though.

"The rally in HSBC is unsustainable," said Mr. So. He noted that a recent move by the bank's management to start a share buyback program, instead of gradually boosting dividends, "only shows that the earnings outlook isn't good."

Hiroyuki Kachi contributed to this article.

Write to Ese Erheriene at ese.erheriene@wsj.com

(END) Dow Jones Newswires

September 01, 2016 01:15 ET (05:15 GMT)

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