Asian markets take breather but warnings of more volatility

27-Oct-2018 Intellasia | AFP | 6:00 AM Print This Post

Asian markets fell Friday as trade tensions and geopolitical worries kept investors from tracking a rebound on Wall Street, with observers warning of further volatility to come.

Trading floors were a little calmer in early business after a punishing week that witnessed steep losses across the board, with several indexes wiping out their year’s gains as the tech and energy sectors took a beating.

New York’s three main indexes provided some solace by posting healthy gains thanks to some upbeat earnings but they are still down from last Friday’s close with a feeling the bottom has not been found yet.

Analysts said there is a concern that even US markets have succumbed to the hefty selling pressure, having managed to ride out much of the volatility this year thanks to the strengthening domestic economy.

However, dealers there are now feeling the pinch from the China-US trade row and rising interest rates.

“Unlike the previous sell-off in 2018 that tended to hit a sector or two at a time, the breadth of the latest rout (is) much more pronounced as it is heavyweight champions of the US markets that are leading the way,” said Stephen Innes, head of Asia-Pacific trade at OANDA.

“Indeed, this sell-off is entirely different as on top of the mountains of geopolitical risk, US interest rates are rising quickly and mercilessly squeezing financial conditions.”

He said markets were seeing intermittent gains because of bargain-buying and “everyone expects 2019 to be a real stinker”.

And Con Michalakis, chief investment officer at Statewide Super, told Bloomberg TV: “You’re going to see a lot more volatility. It’s going to be a feature of this environment.”

– ‘No-man’s land’ –

Hong Kong fell 0.7 percent in the afternoon while Tokyo ended 0.4 percent lower and Shanghai 0.2 percent.

Singapore dived 1.4 percent and Seoul shed 1.8 percent, Taipei eased 0.3 percent and Bangkok skidded 0.5 percent.

However, Wellington was marginally higher and Manila added more than one percent.

Energy firms failed to hold early gains, sitting mixed in the afternoon and remaining under pressure as oil prices continue to retreat from their four-year highs seen at the start of the month.

The fall in prices comes as global demand dips, while data showed US stockpiles had grown and tensions with Saudi Arabia simmering over the death of a journalist. Dealers are also concerned about Riyadh’s pledge to increase output to make up for shortfalls as Iranian crude is hit by US sanctions.

The euro struggled at two-month lows against the dollar after a brief rally in response to European Central Bank chief Mario Draghi’s comments playing down risks to the eurozone growth outlook.

“It seems that the market remains unconvinced on Draghi’s views that the risk to the outlook remain ‘broadly balanced’,” said Rodrigo Catril, senior forex strategist at National Australia Bank.

“Technically the euro is in no-man’s land and it seems that the market wants to test the August low of $1.1301 before a material rebound can ensue.”

The greenback also held gains against sterling, with a Brexit deadline approaching and London and Brussels still nowhere near a final agreement.

“It seems that at the moment no news is bad news for the pound, the clock keeps on ticking and politicians remain unable to find a solution to the Brexit deadlock,” Catril said.

In early trade London fell 0.8 percent, while Frankfurt and Paris each shed more than one percent.

– Key figures around 0720 GMT –

TokyoNikkei 225: DOWN 0.4 percent at 21,184.60 (close)

Hong KongHang Seng: DOWN 0.7 percent at 24,830.97

ShanghaiComposite: DOWN 0.2 percent at 2,598.85 (close)

LondonFTSE 100: DOWN 0.8 percent at 6,947.10

euro/dollar: DOWN at $1.1369 from $1.1375 at 2100 GMT

Pound/dollar: UP at $1.2822 from $1.2817

Dollar/yen: DOWN at 112.25 from 112.37 yen

OilWest Texas Intermediate: DOWN 64 cents at $66.69

OilBrent Crude: DOWN 53 cents at $76.36

New YorkDow: UP 1.6 percent at 24,984.55 (close)–finance.html


Category: FinanceAsia

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