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ASIA-MARKETS-UPDATE
Asian markets tumble as global growth fears take hold
HONG KONG, March 25, 2019 (BSS/AFP) – Asian markets plunged Monday after a
sharp sell-off on Wall Street fuelled by concerns about the global economy
and a possible recession in the United States.
There appeared to be very little reaction to news that an investigation
found no evidence of collusion between Donald Trump’s election campaign and
Russia, which observers said removed some uncertainty from markets.
After a broad-based rally since the start of the year built on hopes for
China-US trade talks and a more dovish Federal Reserve, dealers have been
spooked by signs of a worldwide slowdown.
US and European equities went into reverse Friday as the yield on 10-year
Treasury bonds fell below those for three-month notes — the first time this
had happened since before the global financial crisis in 2007.
This so-called inverted yield curve shows investors are more willing to
buy long-term debt — usually considered higher risk — as they consider the
short-term outlook more risky.
The yield curve is closely watched since it has inverted prior to
recessions in recent decades.
The rush to the 10-year US bond market followed weak manufacturing data
out of the US, eurozone giant Germany and France.
That came days after the Fed’s announcement that it was unlikely to lift
interest rates this year owing to unease about the US and global economy.
“Realistically, the European data has generally been poor for most of the
year anyway, so this in itself isn’t news,” said OANDA senior market analyst
Jeffrey Halley.
“The US data has been middling, but both confirm what everyone already
knew, the global economy is slowing down after a 10-year quantitative-easing-
induced bull run,” he added, referring to the massive programme of post-
crisis stimulus.
– ‘Be prepared for a tough week’ –
All three main indexes on Wall Street ended sharply down Friday, while
London and Frankfurt both finished two percent off.
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The losses filtered through to Asia this week. Tokyo was hammered 3.0
percent as the yen, which is considered a safe haven in times of turmoil,
held on to Friday’s advance against the dollar.
Hong Kong and Shanghai both closed two percent off, while Sydney shed 1.1
percent, Singapore dropped 1.4 percent and Seoul sank 1.9 percent.
There was also heavy selling in Wellington, Manila, Taipei and Jakarta.
In early trade London fell 0.5 percent, Frankfurt dived 0.4 percent and
Paris shed 0.9 percent.
“Investors should be prepared for a tough week as we close out March and
the first quarter,” warned Neil Wilson, chief market analyst at Markets.com.
“The bond market has been trying to speak for a while now but it’s been
shouted down by the equity market rally — until now.”
On Monday, a survey by the National Association for Business Economics
found US economists were growing increasingly concerned about the US outlook,
cutting their growth forecasts and warning that the chances of recession were
increasing.
On currency markets, the pound was facing pressure with Prime Minister
Theresa May’s political future hanging in the balance as she looks to push
her Brexit deal through parliament for a third time.
She has been given until April 12 by EU leaders to win backing for the
agreement or find a viable alternative that could include a lengthy extension
to the final divorce.
However, there are reports that members of her own cabinet are plotting to
oust her and were planning to confront her at a crucial meeting later Monday.
On oil markets, the prospect of a global slowdown dug into prices, with
both main contracts extending the losses of more than one percent suffered on
Friday.
The losses sent regional energy firms tumbling, with Hong Kong-listed
CNOOC diving 4.1 percent, while Inpex in Tokyo was 3.8 percent lower and
Sydney-based Woodside Petroleum 2.8 percent off.
– Key figures around 0820 GMT –
Tokyo – Nikkei 225: DOWN 3.0 percent at 20,977.11 (close)
Hong Kong – Hang Seng: DOWN 2.0 percent at 28,523.35 (close)
Shanghai – Composite: DOWN 2.0 percent at 3,043.03 (close)
London – FTSE 100: DOWN 0.5 percent at 7,168.43
Dollar/yen: UP at 110.03 yen from 109.93 yen at 2130 GMT on Friday
Pound/dollar: DOWN at $1.3167 from $1.3210
Euro/pound: UP at 85.79 pence from 85.59 pence
Euro/dollar: UP at $1.1309 from $1.1306
Oil – West Texas Intermediate: DOWN 37 cents at $57.67 per barrel
Oil – Brent Crude: DOWN 32 cents at $66.71 per barrel
New York – DOW: DOWN 1.8 percent at 25,502.32 (close)
BSS/AFP/HR/1440