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ASIA-MARKETS-UPDATE
Hong Kong leads markets rout as 2019 starts on sour note
HONG KONG, Jan 2, 2019 (BSS/AFP) – Asian and European markets plunged
Wednesday, starting the new year by extending a slide that made 2018 the
worst in a decade, as fresh data reinforced worries about the stuttering
Chinese economy.
With a number of potential banana skins dotting the next 12 months —
including the China-US trade row and Brexit — dealers are keeping to the
sidelines as they look for signs of stability.
Hong Kong led the losses, tumbling 2.8 percent, while Shanghai shed more
than one percent after two indicators showed Chinese manufacturing activity
shrank in December.
A private purchasing managers index (PMI) from Caixin Media and IHS Markit
PMI came in at 49.7 from 50.2 in November and below the 50 point mark between
contraction and growth. That came days after the official PMI registered
49.4.
The readings were both around lows not seen since 2017 and are the latest
to highlight problems in the world’s number two economy as Beijing struggles
with the US trade war while also trying to address a dangerously high debt
mountain.
“China manufacturing PMI is falling at a pace faster than economists’
forecast, suggesting global economic slowdown and trade war is hurting the
country’s manufacturing activities,” Margaret Yang, market analyst at CMC
Markets, said in a note.
And Jingyi Pan, a market strategist at IG Asia, told Bloomberg News the
reading was a reminder of the US-China trade tensions and “brings back to the
surface worries on growth”.
There were also market losses in Sydney, which dropped 1.6 percent, while
Seoul shed 1.5 percent and Singapore slipped 0.9 percent. Taipei plunged 1.8
percent while Mumbai was one percent lower. Tokyo and Wellington were closed
for public holidays.
In early European trade London fell 1.6 percent, Paris dived two percent
and Frankfurt was one percent lower.
Investors were also spooked by the ongoing US government shutdown, which
is now in its second week.
Donald Trump on Tuesday invited leaders from both parties to talks to end
the standoff, but with Democrats refusing to pass any budget that would fund
the president’s Mexican border wall there is little optimism a deal can be
made.
MORE/HR/1442
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
– Trump deal call –
For their part, Democrats, who take over the House of Representatives on
Thursday, have lined up spending bills without addressing the wall.
Trump appeared to strike a more conciliatory tone on Twitter by reaching
out to Nancy Pelosi, who is set to become House Speaker again.
“Border Security and the Wall ‘thing’ and Shutdown is not where Nancy
Pelosi wanted to start her tenure as Speaker! Let’s make a deal?” he tweeted.
Also on the radar are trade talks between China and the US, which are set
to begin this month, with Trump hailing “big progress” on the issue at the
weekend.
The president and his Chinese counterpart Xi Jinping last month agreed to
a 90-day halt in their painful tariffs spat so they could resolve their
differences.
Immediate attention is now on the release Friday of US jobs data, which
could provide fresh evidence of the state of the world’s top economy.
A strong reading would put pressure on the Federal Reserve to continue to
lift interest rates, a negative for stock markets, which were battered last
year partly by concerns about the rising cost of borrowing.
Both main oil contracts retreated more than one percent to put them
wallowing around levels last touched in mid-2017, hit by ongoing concerns
about supply and demand and extending losses suffered since the start of
October.
“We’ll probably start off 2019 on the same foot, weighed down by record US
production as well as the lingering trade war,” Phil Streible, senior market
strategist at RJO Futures in Chicago, said.
“We won’t see a rebalancing of the market until past the first quarter, so
I would expect us to get trading right around these lows.”
– Key figures around 0820 GMT –
Hong Kong – Hang Seng: DOWN 2.8 percent at 25,130.35 (close)
Shanghai – Composite: DOWN 1.2 percent at 2,465.29 (close)
Tokyo – Nikkei 225: Closed for public holiday
London – FTSE 100: DOWN 1.6 percent at 6,620.32
Euro/dollar: DOWN at $1.1480 from $1.1460 at 2120 GMT on Monday
Dollar/yen: DOWN at 109.28 yen from 109.58 yen
Pound/dollar: DOWN at $1.2755 from $1.2752
Oil – West Texas Intermediate: DOWN 49 cents at $44.92 per barrel
Oil – Brent Crude: DOWN 58 cents at $53.22 per barrel
New York – Dow: UP 1.2 percent at 23,327.46 (close)
BSS/AFP/HR/1445