* China PMI a tick under forecasts at 50.4, offers little
* Nikkei bounces as Wall St proves resilient to poor US GDP
* Fed keeps upbeat outlook, investors give it benefit of
By Wayne Cole
SYDNEY, May 1 Asian markets suffered a brief
wobble on Thursday as data on China's vast manufacturing sector
just missed forecasts, with holidays across much of the region
muffling the impact.
Beijing's official measure of manufacturing activity (PMI)
came in at 50.4 in April, up a tick from March but under
forecasts of 50.5. The middling outcome was not enough to lessen
concerns about the economy, but neither did it point to a
There was also better news from South Korea as its exports
grew at their strongest annual pace in over a year, suggesting
the recovery in global demand was gathering pace after a soft
start to the year.
The conflicted mood was clear in the Australian dollar,
often a bellwether for market thinking on China given the
country is a major exporter of resources to the Asian giant.
After an initial dip to $0.9279 on the PMI, the currency
quickly rebounded to $0.9300 to be a shade firmer on
the day. The reaction in share markets was modest given most in
the region were off on holiday.
Japan's Nikkei was up 0.4 percent, while Australian
shares eased 0.4 percent. MSCI's broadest index of
Asia-Pacific shares outside Japan barely budged.
Sentiment had been supported somewhat by Wall Street where
the Dow notched up its first record high of the year. The Dow
ended up 0.27 percent, while the S&P 500 gained
0.3 percent and the Nasdaq 0.27 percent.
That was a resilient performance given government data had
shown the U.S. economy grew just 0.1 percent annualised in the
first quarter, far below already gloomy forecasts of 1.2
Net exports, inventories and investment all dragged on
growth, with household spending the only bright spot.
Still, investors have been willing to give the economy the
benefit of the doubt in expectations of a rebound this quarter,
and other data did offer some supporting evidence.
A closely-watched indicator of manufacturing activity in the
Chicago area jumped to 63.0 in April, to be well above
forecasts, while the ADP report on private sector employment
showed a rise of 220,000.
That fuelled hopes the April payrolls report on Friday would
at least meet forecasts of a 210,000 increase in jobs.
FED STAYS HOPEFUL
The Federal Reserve was prepared to look on the bright side,
ending its policy meeting with a relatively upbeat statement as
it pared back its bond buying by another $10 billion.
Recent information "indicates that growth in economic
activity has picked up ... after having slowed sharply during
the winter in part because of adverse weather conditions," the
central bank said after a two-day meeting.
Yet investors in bonds and currencies were less impressed,
taking yields and the dollar lower. Yields on 10-year Treasuries
fell 4 basis points to 2.65 percent, while those on
two-year notes dropped 3 basis points to 0.41 percent
in a sharp move for that tenor.
Interest rate futures also rallied <0#FF:> as the market
pushed back the likely timing of a first hike by the Fed.
That in turn weighed on the U.S. dollar which dropped to
three-week lows against a basket of major currencies.
Pressure on the greenback helped the euro bounce to $1.3870
from a three-week trough of $1.3770. Against the yen, the
dollar was at 102.20, having lost 0.4 percent overnight.
In commodity markets, oil fell as stocks of the fuel in the
United States hit a record high.
Brent crude for June delivery was off 2 cents at
$108.07 on Thursday having shed over a dollar overnight, while
June U.S. crude eased a further 3 cents to $99.71.
Spot gold also fared poorly to stand at $1,290.00 an
ounce, after easing 0.4 percent on Wednesday.
(Editing by Shri Navaratnam)