Asia stocks hit one-year low amid Turkey woes

TOKYO (Reuters) — Asian stocks retreated to a one-year low yesterday as bearish Chinese markets worsened investor sentiment already hurt by Turkey’s financial crisis.

Spreadbetters expected European stocks to open slightly higher, with Britain’s FTSE seen rising 0.2 percent, Germany’s DAX adding 0.1 percent and France’s CAC gaining 0.15 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan slid more than one percent to its lowest since August 2017, after bouncing 0.4 percent the previous day when the Turkish lira showed signs of stabilizing.

Hong Kong’s Hang Seng dropped 1.5 percent, reaching a near one-year low, and the Shanghai Composite Index fell 1.3 percent. Signs of the world’s second-largest economy losing momentum and the ongoing Sino-US trade conflict have weighed on Chinese equities.

“Investors tend to focus on negative aspects of listed companies’ first-half reports, as there is much pessimism and caution in a falling market,” said Linus Yip, a Hong Kong-based analyst at First Shanghai Securities.

Japan’s Nikkei slipped one percent after rallying more than two percent on Tuesday. South Korean markets were closed for a public holiday.

The lira - which plummeted to a record low of 7.24 to the dollar at the week’s start, rattling global markets - was about two percent weaker at 6.47 after rebounding more than eight percent overnight.

While the lira clung above record lows, tensions between Washington and Ankara remained on the boil, keeping the currency on a shaky footing.

Turkey has raised tariffs on some US products under the principle of reciprocity “in response to the US administration’s deliberate attacks on our economy,” Vice President Fuat Oktay wrote on Twitter yesterday.