Asian markets mostly down as global outlook tempers sentiment
While the mood on trading floors is generally upbeat, investors remain concerned about the global economy (Behrouz MEHRI)
Hong Kong (AFP) – Asian markets stuttered Thursday after New York equities retreated from record highs, with weak economic data around the world offsetting a forecast-beating earnings season.
While the mood on trading floors remains broadly positive after a blockbuster start to the year, there are lingering concerns that growth in most parts of the world is well off the pace of the United States.
A dive in German business sentiment — the latest soft reading from the European Union — a growth forecast cut by the Bank of Canada and a drop in Australian inflation were enough to keep US traders from building on Tuesday’s records.
“Investors were dealt with another economic reality check as financial data from Europe remains as sick as ever, this despite a chorus of global central banks stimulus,” said Stephen Innes at SPI Asset Management.
“The weak EU economy is perhaps raising some doubts as investors spent most of the day in self-analysis mode while taking stock of their stocks.”
There was further negativity in Asia, with South Korea on Thursday reporting its biggest quarterly contraction since late 2008. The 0.3 percent drop was also its first negative since the last three months of 2017.
The data has provided a reality check to investors, who have been on a buying spree for much of the year, fuelled by optimism that China and the US will hammer out a deal to end their trade war, as well as central bank dovishness.
Hong Kong was 0.1 percent lower, Seoul dropped 0.2 percent and Shanghai shed 0.3 percent, while Singapore dipped 0.2 percent while Jakarta was off 0.5 percent. However, Tokyo edged up 0.4 percent by the break and Taipei added 0.1 percent. Sydney and Wellington were closed for a public holiday.
– ‘Time will tell’ –
OANDA senior market analyst Jeffrey Halley said: “Time will tell if the US and China lift the rest of the world up or the rest of the world puts the brakes on the US and China. That’s a story for another day but will undoubtedly make the second half of 2019 as interesting as the first.”
Broad unease on trading floors weighed on currencies, with the dollar up against higher-yielding units. The South Korean won shed 0.6 percent, hit by the growth data, while Mexico’s peso shed 0.6 percent and the South African rand dropped 0.7 percent.
On oil markets both main contracts fell again, extending Wednesday retreat from 2019 highs, following data showing a rise in US inventories.
However, expectations are for the commodity to resume its upward march with supplies from OPEC and Russia capped, Venezuela embroiled in crisis and Libya hit by unrest.
Meanwhile, the US removal of waivers that allowed countries to buy from sanctions-hit Iran is expected to hit supplies, though analysts are keeping watch on the region and whether OPEC responds by opening up the taps.
“Frankly, Iran is a smouldering firecracker set in the Middle East powder keg, suggesting that on the slightest of flare-ups oil prices are gapping higher,” said Innes.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.4 percent at 22,280.99 (break)
Hong Kong – Hang Seng: DOWN 0.1 at 29,789.68
Shanghai – Composite: DOWN 0.3 percent at 3,190.61
Euro/dollar: UP at $1.1158 from $1.1156 at 2200 GMT
Pound/dollar: UP at $1.2913 from $1.2902
Dollar/yen: DOWN at 112.00 yen from 112.13 yen
Oil – West Texas Intermediate: DOWN 32 cents at $65.57
Oil – Brent Crude: DOWN 30 cents at $74.27 per barrel
New York – Dow: DOWN 0.2 percent at 26,597.05 (close)
London – FTSE 100: DOWN 0.7 percent at 7,471.75 (close)
Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.