HONG KONG: Asian markets fell yesterday, hit by concerns about the uncertain global economic outlook, the China-US trade war and tepid corporate earnings reports.
With an expected Federal Reserve interest rate cut already priced in, having fuelled a healthy rally, and few other catalysts to drive buying, analysts said investors are also cashing out.
The losses in Asia followed a negative lead from Wall Street, where big-name firms including Caterpillar and United Technology sank on weak corporate reports.
“Stocks’ strong gains are finally succumbing to profit-taking,” Alec Young at FTSE Russell told Bloomberg News.
“Earnings and guidance so far have been mixed and, given the big run-up, it’s no surprise there’s little investor tolerance for even a hint of disappointment.”
Tokyo led losses, sinking two percent as it was hit by a stronger yen and data showing another drop in exports as Japan feels the impact of falling demand and global trade uncertainty.
Hong Kong was down 0.7 percent and Shanghai shed one percent, while Sydney and Singapore each gave up 0.4 percent.
Seoul fell 0.3 percent, with traders unmoved by the Bank of Korea’s first interest rate cut in three years. The won edged up.
Taipei was off 0.3 percent and Mumbai eased 0.4 percent. However, Wellington, Jakarta, Bangkok and Manila eked out small gains.
In early trade London fell 0.5 percent, Paris slid 0.6 percent and Frankfurt dived 1.3 percent.
Energy firms across Asia tracked their US counterparts following another steep drop in oil prices Wednesday that came after government data showing a pick-up in US gasoline inventories. Oil was barely moved Thursday.
The figures represent the weakest demand in five years, analysts said.
“Gasoline consumption is painfully weak given US consumers are in peak driving season, which will be invariably seen as the Grim Reaper of sorts,” said Stephen Innes at Vanguard Markets.
“If we put this data set in the context of slowing China second-quarter GDP, where consumption was the most significant drag, the numbers do suggest that the global economic slowdown is being echoed through weaker global demand data. Definitely a bearish signal for oil demand.”
The dollar fell against its main peers and most high-yielding currencies, having enjoyed a recent rally, on concerns about the length and depth of expected Fed rate cuts.
Adding to dollar selling were comments from the International Monetary Fund that the US unit is overvalued by up to 12 percent based on current economic fundamentals.
However, Innes questioned whether the pound could maintain its gains owing to investors’ increasing concerns about the possibility Britain will crash out of the European Union in October without any agreement. – AFP
