Global stocks nurse post-party headache
london — World shares began 2019 on a downbeat note, oil prices and bond yields skidded lower and the Japanese yen strengthened on Wednesday as data from China to France confirmed investors’ fears of a global economic slowdown.
The Shanghai Composite Index fell 1.2 per cent to 2,465 and Hong Kong’s Hang Seng lost 2.8 per cent to 25,130. Seoul’s Kospi gave up 1.5 per cent to 2,010 and Sydney’s S&P-ASX 200 sank 1.2 per cent to 5,557. India’s Sensex shed 1.2 per cent to 35,817 and Singapore and Taiwan also declined. Tokyo’s markets were closed. In Dubai, the index was down 0.4 per cent, while Abu Dhabi fell 1 per cent.
US stocks fluctuated after erasing deep losses, with financial shares rebounding from a dismal December and crude staging a rally. Treasuries trimmed gains.
The S&P 500 Index all but erased a loss that topped 1 per cent after a report that Saudi Arabia lowered oil exports fuelled a surge in the price of crude. Stocks and oil have been tracking each other in recent weeks. The reversal undid some of the poor sentiment sparked by a weak reading on Chinese manufacturing, which added to concern that global growth is slowing.
The 10-year Treasury yield pared a drop that took it to the lowest in 11 months while similar-maturity German bunds remained on a tear.
Weak manufacturing-activity surveys across Asia were followed by disappointing numbers in the eurozone, sending MSCI’s index of world shares 0.4 per cent lower.
China in particular was in focus, after factory activity contracted for the first time in over two years. The gloom continued in Europe, where the Purchasing Managers’ Index for the eurozone reached its lowest since February 2016. Future output PMIs were at a six-year low.
The data suggests there will be no respite for equities or commodities after the 2018 losses.
“It’s a continuation of the worries over growth. You can see them in the Asian numbers, which all confirm that we have passed peak growth levels,” said Tim Graf, chief macro strategist at State Street Global Advisors. —
The knock-on effects from Chi-
beijing — Stock markets started the new year with a tumble, as disappointing Chinese economic data on Wednesday renewed concerns that a global trade war is weighing on growth.
In Europe, France’s CAC 40 fell 1.6 per cent to 4,653 and Germany’s DAX retreated 0.2 per cent to 10,531. Both opened with losses in excess of 2 per cent and 1 per cent, respectively. London’s FTSE 100 was down 0.9 per cent to 6,667.
US stock index futures sank on Wednesday, offering no respite as Wall Street comes off its worst year in a decade, as weak data in Asia and Europe confirmed fears of a global economic slowdown, while the government shutdown dragged on.
S&P 500 e-minis and Dow eminis were down 1.2 per cent at 7:16am ET, while Nasdaq 100 eminis slid 1.9 per cent.
The Shanghai Composite Index fell 1.2 per cent to 2,465.29 and Hong Kong’s Hang Seng lost 2.8 per cent to 25,130.35. Seoul’s Kospi gave up 1.5 per cent to 2,010.00 and Sydney’s S&P-ASX 200 sank 1.2 per cent to 5,557.80. India’s Sensex shed 1.2 per cent to 35,817.25 and Singapore and Taiwan also declined. Tokyo’s markets were closed. In Dubai, the index was down 0.4 per cent, while Abu Dhabi fell 1 per cent.
A government survey and one by a major business magazine showed Chinese manufacturing weakened in December as global and domestic demand cooled. Forecasters said that could send shockwaves through other economies, particularly in Asia, that supply raw materials and components. Chinese export growth has held up as producers rushed to fill orders before possible new US tariff hikes in Washington’s trade
battle with Beijing, but forecasters said that effect may be fading.
The Chinese slowdown “raises a few red flags”, said Mizuho Bank’s Vishnu Varathan in a report. The slide is “potentially symptomatic of far sharper underlying demand pullback”, he added. Investors are looking
ahead to talks this month aimed at settling a US-Chinese tariff battle that threatens to dampen global economic growth. Presidents Donald Trump and Xi Jinping agreed on December 1 to a 90-day suspension of further tariff hikes in their fight over Beijing’s technology policy but left in place penalties already imposed. No date has been announced but both sides have expressed interest in a settlement.
Economists say the 90-day window is likely too small to resolve the full range of issues that bedevil their relations. Mihir Kapadia, CEO of Sun Global Investments, says the uncertainty in financial markets will “continue until further clarity emerges from the US and China talks”.
The dollar declined to ¥109.16 from Monday’s ¥109.67. The euro retreated to $1.1430 from $1.1466. The Indian rupee Wednesday crashed by 75 paise, its first loss in last four sessions, to close at 70.18 against the US dollar. —