China’s growth woes, US equity futures weigh on Asia’s markets

SYDNEY — Worries about China’s slowing economy spread across Asian markets on Monday with US stock futures turning down and Chinese shares in the red as concerns about US corporate earnings and global growth continued to hit sentiment.

E-Mini futures for the S&P 500 and Dow minis declined about 0.3% each, reversing gains of as much as 0.4% earlier in the day. However, spreadbetters pointed to a firm start for Europe with FTSE futures up 0.5%.

In Asia, Japan’s Nikkei slipped 0.2%, having climbed one percent earlier while South Korea’s KOSPI stumbled 1.6%. Shanghai’s SSE Composite faltered 2.5%.

The losses in Asia were largely led by China’s blue-chip index which tumbled over 3.3% following disappointing earnings from the country’s top liquor maker, Kweichow Moutai.

Hong Kong ’s Hang Seng index also turned red, leaving MSCI’s broadest index of Asia-Pacific shares outside Japan mostly flat after rising over 0.5% earlier in the day.

Chinese data over the weekend underscored worries of a cooling economy as profit growth at its industrial firms slowed for the fifth consecutive month in September as sales of raw materials and manufactured goods ebbed.

Citibank has projected China’s real economic growth to slow to 6.4% year on year in the fourth quarter “amid trade headwinds and domestic uncertainties,” compared to a 6.8% rise at the start of the year. “As lagging indicators, overall industrial revenue and profit should continue to soften accordingly,” it said.

Wider sentiment in global financial markets has been hit by a range of negative factors from an intensifying China-US trade conflict to worries about US corporate earnings to Italian budget woes as well as Federal Reserve rate increases.

Analysts warn of more volatility after heavy losses across major equity indices left investors with negative returns for the year. Bears are on the rise, with some indices already in official correction territory amid heightened worries over corporate earnings and global growth.

“We’re now over halfway through the US earnings season and while headline growth remains strong, there are a number of trends making market participants nervous,” asset manager Insight Investment wrote in a note, citing “explicit commentary” by Caterpillar, 3M and Ford on the adverse effects of US import tariffs and disappointing revenue growth by Amazon and Alphabet among top concerns for investors.

More companies have lagged forecasts this quarter with the beat rate on sales at 44% compared with 58% last quarter, Insight Investment said.

“European earnings are showing a similar trend, with only 43% beating estimates, the lowest in five years,” it added. —