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Asian equities feel fresh strain after emerging market rout
HONG KONG, Sept 6, 2018 (BSS/AFP) – Asian equities suffered fresh losses
Thursday, extending the previous day’s rout as concerns about contagion from
emerging markets fray investor nerves, while sentiment is also being dampened
by the possibility of further US tariffs on China.
And while emerging market currencies — which have taken a battering in
recent weeks — enjoyed a much-needed breather, there are warnings of further
pain to come in foreign exchanges.
Worries that financial crises in Argentina, South Africa and Turkey will
spill over into major economies fuelled a blood-letting across Asia on
Wednesday, which filtered through to Europe.
“Contagion is a normal reaction,” George Boubouras, director at Salter
Brothers Asset Management, said on Bloomberg Television. The contagion “will
get worse”, he warned.
Wall Street ended mixed with the Dow edging up but the Nasdaq took a hit
from a sell-off in tech firms as top officials at Facebook and Twitter
struggled in congressional testimony and the White House warned of a possible
legal crackdown.
Trump “has the tech giants in his sights” following his claims of
political bias against conservatives, said Greg McKenna, chief market
strategist at AxiTrader.
“That’s important for global markets because the only thing between where
we are today and a complete rout is the relative stability of US stocks. And
we know a big chunk of the S&P’s rally has been the performance of tech
stocks whose rally has been going increasingly vertical.”
– ‘Enduring storm’ –
In equity trading, Tokyo ended 0.4 percent lower, while Hong Kong shed
one percent after diving 2.6 percent Wednesday. Sydney fell 0.4 percent and
Wellington lost 1.4 percent.
Shanghai lost 0.5 percent, Seoul sank 0.2 percent and Singapore was 0.4
percent off.
Manila plunged more than two percent but Jakarta, which lost more than
three percent Wednesday, was one percent higher in late business.
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
On currency markets, the Indonesian rupiah edged up after hitting its
lowest level since the Asian financial crisis 20 years ago though it skirted
the 15,000-to-the-dollar mark. The Mexican peso also posted gains but the
South African rand was flat after paring an early rally.
McKenna warned that pressure remains on traders and said “any hiatus in
the forex universe is just a little calm in an enduring storm”.
While the emerging market sell-off is in focus, Donald Trump’s trade rows
continue to play out, with a public consultation on his threatened tariffs on
$200 billion of Chinese goods ending this week.
Investors are keeping a nervous eye on Washington after the president said
last month he wanted to impose the levies as soon as the deadline had passed.
And talks between Washington and Ottawa on the revised North American Free
Trade Agreement are continuing, with Canada’s Foreign Minister Chrystia
Freeland saying the two are making “good progress”.
Trump has repeatedly threatened to leave Canada out of a revised NAFTA,
after a deal between the US and Mexico was struck early last week.
In early European trade London and Frankfurt each eased 0.1 percent but
Paris added 0.2 percent.
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: DOWN 0.4 percent at 22,487.94 (close)
Hong Kong – Hang Seng: DOWN 1.0 percent at 26,974.82 (close)
Shanghai – Composite: DOWN 0.5 percent at 2,691.59 (close)
London – FTSE 100: DOWN 0.1 percent at 7,378.11
Euro/dollar: DOWN at $1.1628 from $1.1631 at 2100 GMT
Pound/dollar: UP at $1.2917 from $1.2907
Dollar/yen: DOWN at 111.32 yen from 111.53 yen
Oil – West Texas Intermediate: DOWN 12 cents at $68.60 per barrel
Oil – Brent Crude: DOWN 11 cents at $77.16
New York – Dow: UP 0.1 percent at 25,974.99 (close)
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