Asian markets suffer bloodletting on trade, geopolitical fears
AFP – Asian markets went into freefall Thursday, tracking a plunge on Wall Street, with trading floors awash with negativity on geopolitical concerns and following weak US economic and earnings data.
The bloodletting is the latest to hit global equities, which have been pummelled this year by a wave of problems led by the China-US trade war and rising Federal Reserve interest rates.
On top of those in recent weeks has been a brewing nuclear standoff between the US and Russia, the killing of a Saudi journalist, Brexit and Italy’s budget row with the European Union.
US stocks have broadly managed to avoid the hefty selling witnessed elsewhere — even clocking up a few record highs — thanks to a strong economy and mostly positive corporate results.
However, New York has finally succumbed as investors contemplate an end to the decade of cheap credit and the imposition of steep tariffs by the US and China in their ever-deepening trade row.
The Dow and the S&P 500 wiped out their gains for the year, while the Nasdaq dived more than four percent as the under-pressure tech sector took another beating.
The selling came after data showed US home sales were at their slowest pace for nearly two years, while the Fed said firms nationwide are worried about the tariffs as well as labour shortages.
And those losses filtered through to Asia, where Tokyo was scythed 2.8 percent, Shanghai dived 1.4 percent and Sydney sank 2.2 percent, also losing its gains for the year.
Hong Kong lost 1.9 percent, with airline Cathay Pacific collapsing 6.5 percent at one point after it admitted to suffering a major data leak affecting up to 9.4 million passengers worldwide.
Seoul shed 2.1 percent as data showed the South Korean economy expanded at a slower pace than expected in the third quarter.
Wellington lost 0.9 percent, Manila fell 2.2 percent and Taipei retreated 2.3 percent.
– ‘Sharks are circling’ –
"With the S&P and Nasdaq having been drawn into the global equity maelstrom, the US bellwethers are no longer the invincible titans that have held up global market sentiment for what seems like an eternity," said Stephen Innes, head of Asia-Pacific trade at OANDA.
"With China-US trade hopes fading as both sides appear to be digging in for the long haul, things could get blustery in a hurry. Indeed the sharks are circling."
While the losses in Asia were across the board, technology firms were badly hit as they tracked their US peers, while the energy sector was also sharply lower as oil prices continue to drop.
Hong Kong-listed AAC Technologies shed more than six percent and market heavyweight Tencent was three percent lower, while Taiwan Semiconductor Manufacturing slid four percent in Taipei. Sony dived five percent in Tokyo and Sharp was more than seven percent lower.
And the dive in crude helped Woodside Petroleum sink 1.7 percent in Sydney, while CNOOC and PetroChina skidded four percent in Hong Kong.
Both main contracts extended Wednesday’s losses after a huge build in US inventories and as Saudi Arabia assured it will not use the commodity as a diplomatic weapon despite being under fire for the killing of journalist Jamal Khashoggi.
Oil has been sliding since the start of the month, when it hit highs not seen since 2014 and when observers were tipping prices to hit $100.
The sell-off has been fuelled by a number of issues including worries about a drop in demand as the global economy, particularly China, stutters and the strengthening dollar makes oil more expensive for holders of other currencies.
Flight away from the riskier assets sunk most emerging market- and higher-yielding currencies. The South African rand plunged more than two percent against the dollar, while the Mexican peso was 1.5 percent off. South Korea’s won fell 0.4 percent and the Australian dollar was 0.3 percent off.
– Key figures around 0315 GMT –
Tokyo – Nikkei 225: DOWN 2.8 percent at 21,377.20 (break)
Hong Kong – Hang Seng: DOWN 1.9 percent at 24,783.19
Shanghai – Composite: DOWN 1.5 percent at 2,565.23
Euro/dollar: UP at $1.1410 from $1.1393 at 2100 GMT
Pound/dollar: UP at $1.2888 from $1.2884
Dollar/yen: DOWN at 112.10 from 112.19 yen
Oil – West Texas Intermediate: DOWN 57 cents at $66.25 per barrel
Oil – Brent Crude: DOWN 58 cents at $75.59 per barrel
New York – Dow: DOWN 2.4 percent at 24,583.42 (close)
New York – S&P 500: DOWN 3.1 percent at 2,656.10 (close)
New York – Nasdaq: DOWN 4.4 percent at 7,108.40 (close)
London – FTSE 100: UP 0.1 percent at 6,962.98 points (close)