HONG KONG: Asian stocks fluctuated Monday with investors still on edge after last week’s rout, with caution after another hammering for Wall Street offsetting bargain-buying.
Even a forecast-busting jump in US economic growth in the third quarter was not enough to prevent all three main indexes in New York from tanking, with the Dow and S&P 500 falling into negative territory for the year.
The US losses came after disappointing earnings reports from titans Alphabet and Amazon, which compounded concerns about rising interest rates and the China-US trade war that shows no sign of abating.
“Fears of an economic slowdown in the US proved to be premature, but investors worry that the boost from (Donald) Trump tax cuts is evaporating,” said Alfonso Esparza, senior market analyst at OANDA.
“Stocks have been vulnerable as the US Federal Reserve stands firm on its plans to hike one more time this year and three or four in 2019 on its path to rate normalisation. US-China relations have not improved and earning reports have started to reflect the impact of tariffs on China.”
Hong Kong fell 0.1% in the afternoon after moving between gains and losses, while Tokyo ended 0.2% off and Shanghai lost more than 2%. Seoul shed 1.5%.
But Sydney climbed 1.1%, Singapore added 0.5%, Wellington put on 0.6% and Jakarta was 0.4% down.
“I still think there is room for a bit of a downside to go because I do see this as being largely a structural shift in markets,” Kyle Rodda, a market analyst at IG Group in Melbourne, told Bloomberg Television.
“The overall sentiment is still to the downside, is still quite bearish and there will be a little while for this correction to play out.”
Attention now turns to the release later this week of US jobs data for a fresh glimpse at the world’s top economy.
The dollar was mostly up against higher-yielding and emerging market currencies including the Mexican peso, Australian dollar, the Indonesian rupiah and Thai baht.
It was also up against the yuan, with weak industrial profits data and speculation of fresh monetary easing putting downward pressure on the Chinese unit, which is sitting close to a 10-year low.
However, reports said Beijing was keeping an eye on the currency market and was ready to support the yuan and prevent it from falling past 7 to the dollar.
There is speculation that authorities are allowing the unit to weaken to offset the effects of US tariffs, though Washington has held off labelling China a currency manipulator.
The euro struggled against the greenback after German Chancellor Angela Merkel’s fragile coalition government suffered heavy losses in a key regional election and a junior partner threatened to quit, which would likely spark a fresh general election.
And oil prices dipped as investors weighed the prospects of slower demand against looming US sanctions against Iranian crude exports.
The commodity, which was sitting near four-year highs at the start of the month, has tumbled in recent weeks on worries about demand and worries about the China-US trade war.
“Crude oil prices receded further south last week as investor sentiments struggled on weaker economic projections and fear-mongering from a crash in global stock markets,” said Benjamin Lu, commodities analyst with Phillip Futures in Singapore.
“Cooling economic conditions and symptoms of softer international trade has exacerbated bearish conditions as growth outlook dims,” he added.
Key figures around 0710 GMT
Tokyo – Nikkei 225: DOWN 0.2% at 21,149.80 (close)
Hong Kong – Hang Seng: DOWN 0.1% at 24,703.37
Shanghai – Composite: DOWN 2.2% at 2,542.10 (close)
Euro/dollar: DOWN at $1.1391 from $1.1400 at 2100 GMT Friday
Pound/dollar: UP at $1.2833 from $1.2800
Dollar/yen: UP at 111.94 from 111.83 yen
Oil – West Texas Intermediate: DOWN 23 cents at US$67.36 per barrel
Oil – Brent Crude: DOWN 32 cents at US$77.30 per barrel
New York – Dow: DOWN 1.2% at 24,688.31 (close)
London – FTSE 100: DOWN 1.4% at 6,906.09 (close)