HONG KONG, July 18, 2019 (BSS/AFP) – Asian markets fell on Thursday, hit
by concerns about the uncertain global economic outlook, the China-US trade
war and tepid corporate earnings reports.
With an expected Federal Reserve interest rate cut already priced in,
having fuelled a healthy rally, and few other catalysts to drive buying,
analysts said investors are also cashing out.
The losses in Asia followed a negative lead from Wall Street, where big-
name firms including Caterpillar and United Technology sank on weak corporate
reports.
“Stocks’ strong gains are finally succumbing to profit-taking,” Alec Young
at FTSE Russell told Bloomberg News.
“Earnings and guidance so far have been mixed and, given the big run-up,
it’s no surprise there’s little investor tolerance for even a hint of
disappointment.”
In early trade Hong Kong and Shanghai were each down 0.7 percent while
Tokyo ended the morning 1.6 percent lower, hit by a stronger yen and data
showing another drop in exports as Japan feels the impact of falling demand
and global trade uncertainty.
Sydney and Singapore both lost 0.3 percent, Seoul fell 0.5 percent and
Taipei was off 0.1 percent. However, Wellington and Manila eked out small
gains.
Energy firms across Asia tracked their US counterparts following another
steep drop in oil prices that came after government data showing a pick-up in
US gasoline inventories.
The figures represent the weakest demand in five years, analysts said.
“Gasoline consumption is painfully weak given US consumers are in peak
driving season, which will be invariably seen as the Grim Reaper of sorts,”
said Stephen Innes at Vanguard Markets.
“If we put this data set in the context of slowing China second-quarter
GDP, where consumption was the most significant drag, the numbers do suggest
that the global economic slowdown is being echoed through weaker global
demand data. Definitely a bearish signal for oil demand.”
The dollar fell against its main peers and most high-yielding currencies,
having enjoyed a recent rally, on concerns about the length and depth of
expected Fed rate cuts.
Adding to dollar selling were comments from the International Monetary
Fund that the US unit is overvalued by up to 12 percent based on current
economic fundamentals.
However, Innes questioned whether the pound could maintain its gains owing
to investors’ increasing concerns about the possibility Britain will crash
out of the European Union in October without any agreement.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 1.6 percent at 21,126.12 (break)
Hong Kong – Hang Seng: DOWN 0.7 percent at 28,391.11
Shanghai – Composite: DOWN 0.7 percent at 2,910.54
Pound/dollar: UP at $1.2436 from $1.2431 at 2050 GMT
Euro/pound: UP at 90.33 pence from 90.27 pence
Euro/dollar: UP at $1.1235 from $1.1222
Dollar/yen: DOWN at 107.68 yen from 108.11 yen
West Texas Intermediate: DOWN 17 cents at $56.61 per barrel
Brent North Sea crude: DOWN four cents at $63.62 per barrel
New York – Dow: DOWN 0.4 percent at 27,219.85 (close)
London – FTSE 100: DOWN 0.6 percent at 7,535.46 (close)