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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 2018 peak.
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 with less
than 24 hours before a midnight Friday deadline to reach agreement.
Rising tensions 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 it drew a furious response from
Beijing, which accused Washington of “fabricating facts”.
The row erupted as the two sides prepare for talks next month to resolve
their trade conflict.
“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 both WTI and Brent
paring gains earlier Friday.
Analysts said OPEC moves to cut production would likely have little
effect.
“There’s nothing OPEC can do about that predicament,” Sam Margolin, a
Wolfe Research LLC analyst, said.
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“The solution lies only in market confidence around global growth, the US-
China trade war, and the pace of Fed rate hikes.”
– ‘Irritable Powell syndrome’ –
Japanese stocks again bore the brunt of Asian losses Friday, with the
Nikkei falling further into bear market territory to hit a fresh 15-month low
and regional shares on course for the worst week since October.
Nissan slipped 2.04 percent after its former chairman Carlos Ghosn faced a
fresh criminal allegation that could keep him in jail well into 2019.
Shanghai retreated 0.8 percent, capping a difficult year for Chinese
equities, with nearly $3 trillion wiped off the value of the country’s stock
market since the end of January.
Sydney also lost ground while Hong Kong recovered earlier losses to chalk
up a 0.5 percent gain.
The greenback struggled as investors shunned risk, wallowing near the 111-
yen mark and adding to downward pressure on the Nikkei.
“The dollar is expected to continue facing downside pressure against major
currencies,” said Minori Uchida, head of Tokyo global markets research at
MUFG Bank.
Currency traders had a case of “irritable Powell syndrome”, quipped
Stephen Innes, head of Asia-Pacific trade at OANDA, after 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 Secretary Steven Mnuchin said Wall Street’s response to the
Fed’s move went too far but European equities also closed lower Thursday.
Eurozone stock markets fell further at the open Friday, with Frankfurt and
Paris down 0.4 percent, while London was flat.
– Key figures around 0820 GMT –
Tokyo – Nikkei 225: DOWN 1.1 percent at 20,166.19 (close)
Hong Kong – Hang Seng: UP 0.5 percent at 25,753.42 (close)
Shanghai – Composite: DOWN 0.8 percent at 2,516.25 (close)
Euro/dollar: UP at $1.1472 from $1.1450 at 2200 GMT
Dollar/yen: DOWN at 111.17 yen from 111.24 yen
Pound/dollar: UP at $1.2694 from $1.2659
Oil – West Texas Intermediate: UP 51 cents at $46.39 per barrel
Oil – Brent Crude: UP 42 cents at $54.85 per barrel
New York – Dow: DOWN 2.0 percent at 22,859.60 (close)
London – FTSE 100: FLAT percent at 6,714.15
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