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Tokyo stocks rebound after Christmas slump
HONG KONG, Dec 26, 2018 (BSS/AFP) – Japanese stocks recovered slightly on
Wednesday after suffering their worst finish in almost two years, but other
Asian markets were mixed after President Donald Trump marked Christmas with a
renewed attack on the Federal Reserve.
Tokyo’s benchmark Nikkei 225 index plummeted to a 20-month low on Tuesday
on fears over the US economy and a government shutdown. That came after a
brutal run on Wall Street that saw US stocks sink for a fourth straight
session.
As the US stock market looked on track for its worst December since the
Great Depression, Trump on Tuesday berated the Fed for its stewardship of the
economy, a regular recent complaint against the US central bank.
However, Tokyo closed higher on Wednesday, logging its first positive
finish in six sessions. Chinese stocks closed slightly lower, while Seoul
also dropped.
Financial markets in Australia, Hong Kong and New Zealand are closed for a
public holiday.
Markets have been roiled by ongoing uncertainty in the US, with Treasury
Secretary Stephen Mnuchin berated for holding a call with the six biggest US
banks and then reporting on Twitter that the six CEOs have “ample liquidity”
available.
Investors were also unnerved by weekend news reports that Trump had asked
about the possibility of firing Fed Chairman Jerome Powell, accounts that
Mnuchin said Trump has denied.
– ‘Panic mode’ –
Analysts said investors had been spooked by Trump’s unpredictable
behaviour.
“The markets are in panic mode that the US economy is tanking, expecting
the benefit of Trump’s fiscal stimulus will falter in 2019,” said Stephen
Innes, head of Asia-Pacific trade at OANDA.
“After all, it was the US market that was carrying the weight of global
risk sentiment on its shoulder. If the US economy turns south, global capital
markets are in for a world of hurt.”
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However, Norio Miyagawa, senior economist at Mizuho Securities, said that
despite the recent market rout, there has been no clear sign of a recession
in the US.
“Our judgement is that the US economy remains solid at the moment”, though
investors need pay attention to the possible impact of US trade rows with
other countries on financial markets and business outlooks, he said in a
note.
The euro was moving narrowly against the dollar on Wednesday.
“The jury is out on this one, US political uncertainty vs weak EU
economy,” said Innes in a note.
“Most days I would favour the weak EU economy, but the swamp and numerous
political sinkholes in Washington are too hard to ignore.”
– Key figures around 0800 GMT –
Tokyo – Nikkei: – UP 0.89 percent at 19,327.06 (close)
Hong Kong: CLOSED
Shanghai – composite: DOWN 0.26 percent at 2,498.29 (close)
Euro/dollar: DOWN at $1.1405 from $1.1415
Dollar/yen: FLAT at 110.43
Pound/dollar: UP at $1.2708 from $1.2706
Oil – Brent Crude: DOWN 15 cents at $50.20
Oil – West Texas Intermediate: DOWN 4 cents at $42.71
New York – Dow: DOWN 2.9 percent at 21,792.20 (close)
London – FTSE 100: DOWN 0.52 at 6,685.99 (close)
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