Asian shares buckle to Saudi anxieties, Italian budget rows

TOKYO: Asian shares slumped yesterday as a cocktail of negative drivers from Saudi Arabia’s diplomatic isolation to fresh worries about trade wars whacked sentiment across the region.

Selling in Asia erased gains made in rally of the previous two sessions, which were led by China stimulus hopes, with the MSCI’s broadest index of AsiaPacific shares outside Japan dropping 2.2 per cent.

Declines in many regional benchmark indexes also exceeded 2 per cent.

European shares are likely to come under pressure with France’s CAC and Germany’s DAX set to pierce their 2018 lows.

Spread-betters see CAC falling 0.6 per cent and Dax 0.9 per cent. Britain’s FTSE is seen falling 0.5 per cent.

South Korea’s Kospi and Hong Kong’s Hang Seng both fell 3 per cent while Japan’s Nikkei lost 2.7 per cent. MSCI’s index for the region including Japan hit the lowest level since May 2017.

“We’ve got a few negative factors when market sentiment was already fragile,” said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management. “And earnings from some Japanese companies were weaker than expected, with some starting to blame trade wars.”

US stock futures dropped 1.0 per cent in Asia. On Monday, the S&P 500 lost 0.43 per cent as investors kept a wary eye on earnings amid global growth worries.

Enthusiasm over some upbeat results was tempered by the growing political uncertainty around the world.

“In short, the world seems to be getting into chaos,” said Akira Takei, bond fund manager at Asset Management One. — Reuters