China stocks extended gains after a private-sector July non-manufacturing PMI eased growth worries, while investors shifted focus to this week's economic data and the People's Bank of China.
Shanghai's stock market extended its advance on the 5th, with the Shanghai Composite Index closing at 3,878.4296, up 56.1450 points, or 1.46%, and ending near the session high after briefly moving above the 3,900 level in intraday trade. The move came as a private-sector July non-manufacturing PMI (purchasing managers' index) for China fell from the previous month but stayed above the 50 threshold that separates expansion from contraction, helping ease concerns about the country's economic outlook. Tech stocks led the gains, supported by expectations for Chinese government industrial support measures and by the view that valuations had become attractive after the recent correction. The index was already up 51.2745 points, or 1.34%, at 3,873.5591 by the midday break, and buying momentum strengthened into the close. Even so, structural strains including the prolonged property downturn and export headwinds continue to cloud the outlook, leaving the durability of a one-way rally in doubt. The stronger tone in Shanghai also lifted sentiment elsewhere in Asia, with Hong Kong's Hang Seng Index trading firmly, while attention is now shifting to key economic releases later this week and the policy stance of the People's Bank of China (China's central bank).