Data released earlier on Tuesday showed that the China Caixin/Markit Manufacturing Purchasing Managers' index (PMI) fell to 50.3 in April, missing economist's forecasts' of 51.0. April's data was a significant decline from a reading of 51.2 in March.
Manufacturing PMI for April echoed slowdown of official prints, confirming signals from the leading indicators. Analysts expect the Chinese economy to have peaked in Q1 and is set to lose steam for the rest of 2017 as housing and infrastructure are set to slow down.
Production growth and total new orders rose at the slowest pace since last September, with both showing only slight improvement from the previous month. Sharp falls in prices of iron ore, steel and other raw materials led to a sharp cooling in producer price inflation.
"We expect the peak in the China cycle to underpin the picture of reflation losing steam with less support for equity markets and more support for bond markets. Also, commodity prices are likely to have peaked and, in our view, the CNY should continue on a path of gradual weakening," said Danske Bank in a report.
