Asian Markets Wobble on U.S. Drop, China Worries
02 September 2015 - 12:30PM
Dow Jones News
Asian markets dropped early Wednesday following big drops in the
U.S. market and persistent concerns about the strength of China's
economy.
In recent weeks, stocks, currencies and commodities have dropped
dramatically on signs of a slowdown in Chinese growth.
Disappointing economic data out of China Tuesday triggered more
selling after Beijing's devaluation of its currency and a sharp
selloff in the Shanghai stock market, fueling concerns around the
globe.
"There are some pretty dark clouds at the moment," said Chris
Weston, Australia-based chief market strategist at brokerage IG.
"People should be thinking about going into cash or going
short."
On Wednesday, South Korea's Kospi was down 1.4%, the Nikkei
Stock Average was down 1.1% and S&P ASX 200 was down 0.4%.
China's stock market has fallen 2% this week in the lead-up to a
parade Thursday in Beijing to celebrate the 70th anniversary of the
end of World War II. Analysts say government-backed funds have been
trying to prop up the market in recent days ahead of the event.
The Shanghai Composite Index fell 1.2% Tuesday. China markets
will be closed Thursday and Friday for national holiday.
On Wednesday, the region extended its slump after U.S. stocks
tumbled overnight. The Dow Jones Industrial Average lost 2.8% while
the S&P 500 declined 3%.
For the year, the Dow Jones Industrial Average is down 9.9%.
The region's markets pared losses slightly as U.S. stock futures
turned positive. S&P 500 stock futures were last up 0.6%. U.S.
markets will be closed next Monday for Labor Day.
Gold, a safe haven asset, slipped 0.1% to $1,138.50 a troy ounce
in Asia trade.
In Australia, investors expect economic data for the second
quarter later today. Despite growing concerns over the country's
economy at the end of a long mining-investment boom, economists on
average expect GDP to have grown by 0.4% in the second quarter.
Official data will be released at 0130 GMT.
CMC Markets chief market analyst Ric Spooner said the data could
pressure the Australia market further given that it comes at a time
of heightened nervousness.
Meanwhile, Asian currencies were mixed. The Malaysian ringgit
weakened 0.6% to trade at 4.19 against the U.S. dollar from its
level late in Asia on Tuesday. The ringgit has been the worst hit
among Asian emerging market currencies this year, as lower
commodity prices and weaker demand from China hurt Malaysian
exports.
The Japanese yen weakened 0.5% to trade at 120.04 against the
U.S. dollar. A weaker yen usually bodes well for Japanese stocks as
Japanese exports benefit from lower costs at home, but Hideyuki
Ishiguro, senior strategist at Okasan Securities, said worries
about China and the U.S. Federal Reserve rate decision later this
year were driving selling.
"Nothing really has changed since last week. There is still
uncertainty over the Fed's rate increase and mistrust for China,"
he said.
The Korean won strengthened by 0.2% against the U.S. dollar.
Brent crude oil, which had rallied in recent days, slumped 1.9%
to $48.64 in early Asia trade Wednesday. U.S. oil prices fell 7.7%
overnight.
On Tuesday, China's official manufacturing purchasing managers
index for August fell to its lowest level in three years,
corroborating earlier indications of a slowdown from a gauge on
manufacturing activity. A separate reading on manufacturing by
Caixin Media Co. and research firm Markit Ltd. fell to a more than
six-year low.
Robb M. Stewart contributed to this article.
Write to Chao Deng at Chao.Deng@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 01, 2015 22:15 ET (02:15 GMT)
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