China's markets take a hit after disappointing US factory report

China stocks slide: Chinese stocks tumbled on Friday, following a global market decline triggered by disappointing US factory activity data. The data, which revealed an eight-month low in US manufacturing activity, heightened fears of an economic slowdown. The ongoing Middle East conflict and China's sluggish recovery further dampened market sentiment.

On Thursday, US manufacturing activity fell short of expectations, leading to broad risk aversion among investors, despite earlier signals from the Federal Reserve hinting at a potential rate cut as soon as September.

Middle East tensions intensified after the Israeli military reported the death of Hamas’ military leader, Mohammed Deif, in an airstrike in Gaza last month. This followed the killing of Hamas' political leader Ismail Haniyeh in Tehran.

China's economic woes deepen

China's economic challenges also weighed heavily on the market. Recent data indicated a sharp contraction in manufacturing activity, and second-quarter economic growth fell short of expectations.

"Market volatility has increased as investors seek refuge in safer assets amid fears of an economic downturn and uncertain investment returns," commented Zheng Yufei, an analyst at Guosen Securities (HK).

The Shanghai Composite index fell by 0.92 per cent  to 2,905.34, marking its steepest single-day drop since July 23. 

Similarly, the CSI300 index declined by 1.02 per cent , with the financial sector sub-index slipping 1.07 per cent . While the consumer staples sector saw a modest increase of 0.07 per cent , the real estate sector dropped by 1.22 per cent , and healthcare rose by 0.91 per cent . 

The Hang Seng index fell 2.08 per cent , or 359.45 points, to 16,945.51, and the Hang Seng China Enterprises index decreased by 1.83 per cent  to 5,974.85. 

For the week, the CSI 300 lost 0.7 per cent , and the Hang Seng dropped 0.4 per cent . The Shenzhen index was down 1.27 per cent , and the ChiNext Composite index weakened by 1.66 per cent . 

Additionally, the Hang Seng’s energy shares sub-index fell by 1.2 per cent , the IT sector decreased by 2.7 per cent , financials were down 1.96 per cent , and the property sector declined by 1.28 per cent . 
Regionally, MSCI's Asia ex-Japan stock index fell 2.38 per cent , while Japan's Nikkei index closed down 5.81 per cent .