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Asia shares round out rough week with fresh losses
HONG KONG, Dec 21, 2018 (BSS/AFP) – Fresh political turbulence in
Washington and renewed fears over US-China relations pushed Asian markets
lower Friday, as a global slump sparked by unease over Fed policy showed no
signs of easing.
The resignation of US Defense Secretary Jim Mattis — seen as a moderating
force on an often impulsive president — and the looming threat of a federal
government shutdown alarmed investors as concern grows over weakening global
growth.
US stocks endured a torrid session, the latest losses in a bruising
December that has set up Wall Street for its worst year since the 2007
financial crisis, with the Nasdaq now almost 20 percent off its peak this
year.
Shares turned sharply lower after President Donald Trump hardened his
demand Congress fund a US-Mexico border wall, plunging Washington into chaos
and leaving the US government on the verge of a Christmas shutdown.
Rising tension between the world’s two largest economies also unnerved
markets, with China hitting back at the US after the Justice Department
indicted two alleged Chinese hackers accused of having ties to Beijing’s
security services.
US officials said the indictment showed President Xi Jinping had not
fulfilled his pledge to stop cybercrime, but China accused the US of
“fabricating facts” and warned Washington to drop the prosecution.
The spat sparked fears that efforts to resolve a simmering trade conflict
may yet be derailed.
“A potential US government shutdown and US accusations of Chinese hacking
fuelled existing market concerns about economic growth,” said Michael
McCarthy, chief market strategist at CMC Markets and Stockbroking.
Crude added to anxiety on financial markets, with the American benchmark
at one point sinking below $46 a barrel, its lowest level since July 2017.
Both WTI and Brent recovered some losses in Asian trade Friday, but
analysts say fears over demand and oversupply are likely to continue downward
pressure on prices.
“To say things are a bit negative out here could be a significant
understatement… compounded by OPEC’s seemingly rudderless efforts in these
turbulent waters,” said Stephen Innes, head of Asia-Pacific trade at OANDA.
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He added “the latest production cuts are not sufficient to right the
ship”.
– ‘Irritable Powell syndrome’ –
Japanese stocks again bore the brunt of Asian losses Friday, with the
Nikkei falling further into bear market territory and regional shares on
course for the worst week since October.
Data Friday showed Japanese inflation in November falling to 0.9 percent,
far below the Bank of Japan’s two-percent target.
Hong Kong, Shanghai and Sydney were also down.
The greenback fell as investors shunned risk, wallowing near the 111-yen
mark and adding to downward pressure on the Nikkei.
Innes quipped currency traders had a case of “irritable Powell syndrome”,
after the Fed chairman Jerome Powell unnerved equities and the US dollar
Wednesday when he said the bank would not change course on reducing its
balance sheet.
Markets sank across the world even as the Fed predicted two interest rate
increases next year — down from three — with the bank trimming its forecast
for US growth and inflation.
“The risks are that this weakness that we’re seeing will continue into
next year,” Shane Oliver, head of investment strategy at AMP Capital
Investors, told Bloomberg TV.
“The Fed should come out and say, if need be, we can adjust the rate at
which we undertake quantitative tightening. That would go a long way to help
settle markets.”
US Treasury Steven Mnuchin said Wall Street’s response to the Fed’s move
went too far but European equities also closed lower Thursday.
The pound earlier trimmed a gain after the Bank of England forecast
inflation slowing to below the two percent target as soon as January.
Investors are also awaiting later Friday the latest US personal income and
spending data, along with a gauge of inflation.
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: DOWN 1.8 per percent at 20,029.30 (break)
Hong Kong – Hang Seng: DOWN 0.2 percent at 25,550.79
Shanghai – Composite: DOWN 0.9 percent at 2,514.43
Euro/dollar: DOWN at $1.1449 from $1.1450 at 2200 GMT
Dollar/yen: FLAT at 111.24 yen from 111.24 yen
Pound/dollar: UP at $1.2661 from $1.2659
Oil – West Texas Intermediate: UP 71 cents at $46.59 per barrel
Oil – Brent Crude: UP 70 cents at $55.18 per barrel
New York – Dow: DOWN 2.0 percent at 22,859.60 (close)
London – FTSE 100: DOWN 0.8 percent at 6,711.93 (close)
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