Stocks wobble, yen hits multi-month highs

London (AFP) – Stock markets wobbled Wednesday as data reinforced worries about a stuttering Chinese economy, helping haven investments including the yen to rally.

“As traders digested another round of disappointing figures from China, risk-off tones dominated,” noted Jasper Lawler, head of research at London Capital Group. 

“Stock markets…fell, while known havens the yen and gold climbed.”

However equities in Europe and the United States came off their lows, creeping into positive territory, as oil prices rebounded more than $2 per barrel.

The euro slid to 123.89 yen, the lowest level since June 2017.The dollar hit a seven-month low at 108.71 yen.

With a number of potential banana skins dotting the next 12 months — including the China-US trade row and Brexit — markets are volatile across the board.

Stock markets on Wednesday extended a slump that in 2018 saw global indices suffer their worst year since the global financial crisis a decade ago.

Hong Kong’s main stocks index led the losses on the first trading day of 2019, tumbling 2.8 percent, while Shanghai shed more than one percent after two indicators showed Chinese manufacturing activity shrank in December.

The readings were both around lows not seen since 2017 and are the latest to highlight problems in the world’s number two economy, as Beijing struggles with the US trade war while also trying to address a dangerously high debt mountain.

Asia’s losses fed through into Europe and the United States, before equities rode on the coattails of a rally in oil prices.

In Europe, both London and Frankfurt closed the day with small gains.

On Wall Street, the Nasdaq climbed into positive territory after opening the day almost two percent lower.

“Bruised by the volatility of the fourth quarter of 2018, investors aren’t yet grabbing the chance to buy the dip with both hands, but it is at least encouraging to see a continuation of the move higher instead of the relentless selling of the past few weeks,” said Chris Beauchamp, chief market analyst at online trading house IG.

Investors are also keeping an eye on the ongoing US government shutdown, which is now in its second week.

US President Donald Trump on Tuesday invited leaders from both parties to talks to end the standoff, but with Democrats refusing to pass any budget that would fund the president’s Mexican border wall there is little optimism a deal can be made.

Also on the radar are trade talks between China and the US, which are set to begin this month, with Trump hailing “big progress” on the issue at the weekend. 

The president and his Chinese counterpart Xi Jinping last month agreed to a 90-day halt in their painful tariffs spat so they could resolve their differences.

Immediate attention was also on the release Friday of US jobs data, which could provide fresh evidence of the state of the world’s top economy.

A strong reading would put pressure on the Federal Reserve to continue to lift interest rates, a negative for stock markets, which were battered last year partly by concerns about the rising cost of borrowing.

– Key figures around 1530 GMT –

London – FTSE 100: UP 0.1 percent at 6,734.23 points (close)

Frankfurt – DAX 30: UP 0.2 percent at 10,580.19  (close)

Paris – CAC 40: DOWN 0.9 percent at 4,689.39 (close)

EURO STOXX 50: DOWN 0.3 percent at 2,991.60

New York – Dow: DOWN 0.3 percent at 23,265.93

Hong Kong – Hang Seng: DOWN 2.8 percent at 25,130.35 (close)

Shanghai – Composite: DOWN 1.2 percent at 2,465.29 (close)

Tokyo – Nikkei 225: Closed for public holiday

Euro/yen:  DOWN at 124.26 from 125.87 yen at 21210 on Monday

Dollar/yen: DOWN at 109.29 yen from 109.58 yen

Euro/dollar: DOWN at $1.1358 from $1.1460 

Pound/dollar: DOWN at $1.2593 from $1.2752

Oil – Brent Crude: UP $2.61 at $56.41 per barrel

Oil – West Texas Intermediate: UP $2.21 at $47.61 

burs-rl/jj