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European stocks wobble, yen hits multi-month highs
LONDON, Jan 3, 2019 (AFP) – Stock markets wobbled yesterday as data
reinforced worries about a stuttering Chinese economy, helping haven
investments including the yen to rally.
“As traders digested another round of disappointing figures from China,
risk-off tones dominated,” noted Jasper Lawler, head of research at London
Capital Group.
“Stock markets… fell, while known havens the yen and gold climbed.”
However equities in Europe and the United States came off their lows,
creeping into positive territory, as oil prices rebounded more than $2 per
barrel.
The euro slid to 123.89 yen, the lowest level since June 2017. The dollar
hit a seven-month low at 108.71 yen.
With a number of potential banana skins dotting the next 12 months —
including the China-US trade row and Brexit — markets are volatile across
the board.
Stock markets on Wednesday extended a slump that in 2018 saw global indices
suffer their worst year since the global financial crisis a decade ago.
Hong Kong’s main stocks index led the losses on the first trading day of
2019, tumbling 2.8 percent, while Shanghai shed more than one percent after
two indicators showed Chinese manufacturing activity shrank in December.
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.
Asia’s losses fed through into Europe and the United States, before
equities rode on the coattails of a rally in oil prices.
In Europe, both London and Frankfurt closed the day with small gains.
On Wall Street, the Nasdaq climbed into positive territory after opening
the day almost two percent lower.
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“Bruised by the volatility of the fourth quarter of 2018, investors aren’t
yet grabbing the chance to buy the dip with both hands, but it is at least
encouraging to see a continuation of the move higher instead of the
relentless selling of the past few weeks,” said Chris Beauchamp, chief market
analyst at online trading house IG.
Investors are also keeping an eye on the ongoing US government shutdown,
which is now in its second week.
US President 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.
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 was also 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.
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