Growth woes curb global shares, US eq­uity fu­tures down

The Gulf Today - Business - - INTERNATIONAL -

SYD­NEY: Asian shares barely man­aged to hold firm on Mon­day af­ter a tu­mul­tuous week for global eq­ui­ties, with US stock fu­tures turn­ing down and Chi­nese mar­kets deep in the red on fresh signs of cool­ing in the world’s sec­ond-big­gest econ­omy.

MSCI’S broad­est index of Asi­apa­cific shares out­side Ja­pan was last up 0.3 per cent af­ter ris­ing just over 0.5 per cent ear­lier in the day.

The losses in Asia were largely led by China’s blue-chip index which tum­bled 2.5 per cent fol­low­ing dis­ap­point­ing earn­ings from the coun­try’s top liquor maker Kwe­i­chow Moutai.

Chi­nese data over the week­end also 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 per cent year-on-year in the fourth quar­ter “amid trade head­winds and do­mes­tic un­cer­tain­ties,” com­pared to a 6.8 per cent 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.

Ja­pan’s Nikkei slipped 0.1 per cent, hav­ing climbed 1 per cent ear­lier while South Korea’s KOSPI eased 0.4 per cent. Shang­hai’s SSE Com­pos­ite fal­tered 1.5 per cent.

HEAVY LOSSES

E-mini fu­tures for the S&P 500 and Dow mi­nis de­clined about 0.1 per cent each, af­ter ris­ing as much as 0.4 per cent ear­lier in the day. Aus­tralian shares, up 1.2 per cent, were a rare bright spot. 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. “Sen­ti­ment is go­ing to con­tinue to dom­i­nate mar­ket di­rec­tion in the short term,” said Nick Twidale of Rakuten Se­cu­ri­ties Aus­tralia in Syd­ney.

“Earn­ings sea­son con­tin­ues... and po­lit­i­cal ten­sions in the United States, Italy, Ger­many and the UK will con­tinue to add to volatil­ity in their re­spec­tive mar­kets as well as con­tribut­ing to over­all global flows,” Twidale added.

In an­other sign of risk aver­sion, 10-year US Trea­suries also re­versed early gains to be al­most flat on the day.

The S&P 500 ended at its low­est level since early May on Fri­day and flirted with cor­rec­tion ter­ri­tory, pres­sured by heavy losses in tech­nol­ogy and in­ter­net shares.

Data out last week showed US eco­nomic growth slowed to an an­nu­alised 3.5 per cent in the third quar­ter with the slow­down partly driven by a tar­iff-re­lated drop in soy­bean ex­ports.

Among emerg­ing mar­kets, Brazil­ian-linked stocks got a lift from the South Amer­i­can coun­try’s pres­i­den­tial elec­tion, which saw the vic­tory of far-right can­di­date Jair Bol­sonaro whose cam­paign cen­tred on prom­ises to clean up pol­i­tics and crack down on crime.

Tokyo-listed Brazil­ian stock ex­change traded funds (ETFS) jumped nearly 14 per cent to 7-1/2month highs af­ter Bol­sonaro, a for­mer Army cap­tain, pro­pelled to vic­tory.

The safe-haven Ja­panese yen has ben­e­fited from the global sell-off in riskier as­sets as in­vestors un­wound carry trade ex­po­sures. It gained 0.6 per cent last week and was last at 111.87 per dol­lar.

Over this week, in­vestors will be keep­ing an eye on the Bank of Ja­pan’s mone­tary pol­icy an­nounce­ment due Wed­nes­day.

The dol­lar index rose 0.1 per cent to 96.470 af­ter gain­ing 0.7 per cent last week.

The euro hov­ered near a more than two-month low to hold at $1.1390.

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