Asian shares struggle to shake off rout despite Wall St bounce

A shadow of a pedestrian is seen on a stock indicator board for the Tokyo Stock Exchange September 19, 2018. — AFP pic
A shadow of a pedestrian is seen on a stock indicator board for the Tokyo Stock Exchange September 19, 2018. — AFP pic

SHANGHAI, Oct 26 — Asian shares wobbled in early trade today, struggling to shake off the previous day’s global markets rout, after weak results from tech giants Alphabet Inc and heightened concerns over world trade and economic growth.

The shaky start for regional bourses came despite a bounce on overnight, which was helped by bargain-hunting and positive earnings from Microsoft Corp.

Those gains were put into perspective, however, as shares of both Inc and Alphabet Inc fell sharply after the closing bell on disappointing earnings.

Predictably, the Nasdaq futures turned down 0.9 per cent and S&P E-mini futures fell 0.6 per cent, underscoring broad worries about US corporate earnings, and the outlook for the economy, which triggered a rout on Wall Street on Wednesday and sent global markets into a tailspin.

In Asia, MSCI’s broadest index of Asia- shares outside Japan was flat after pushing slightly lower in the opening hour.

The index has been bruised by a heavy selloff in the past several days, tumbling more than 3 per cent this week.

South Korea’s Kospi was also down 0.6 per cent, and Australia’s shares were hanging on to modest gains of 0.2 per cent. Japan’s Nikkei stock index was the biggest gainer, up 0.5 per cent, though that only partially erased yesterday’s 3.7 per cent slide.

Financial markets have been whipsawed in recent sessions on concerns over as investors fretted over Sino-US trade frictions, a mixed bag of US corporate earnings, Federal Reserve and Italian budget woes. A slowdown in has been particularly worrying for policy makers and investors, hitting asset markets from stocks to currencies and commodities.

Analysts at Capital Economics sounded a cautious note, suggesting that the bounce in the S&P 500 index on Thursday was only temporary as investors worries about the economic outlook worsen.

“The first, and most important (worry) is that Fed tightening and fading fiscal stimulus will cause the US economy to take a turn for the worse … The second is that China’s economy will continue to struggle,” the analysts said in a note to clients.

“As we have been arguing for a while now, these worries are likely to get worse over the next twelve months or so.”

Investors will get a chance to check the US economic pulse later today when the government releases third-quarter GDP data.

ANZ analysts highlighted weak US core durable goods data as suggesting that “investment is not taking off, even with the apparent tailwind from tax cuts and USD repatriation.”

“This indicates that the boost to GDP growth from the fiscal stimulus could be fairly transitory,” the analysts said.

In currency markets, the euro edged lower, extending weakness after European President Mario Draghi said the bank’s €2.6 trillion (RM12.35 trillion) asset purchase programme will end this year and interest rates could rise after next summer, despite fears about the monetary union’s economic and political future.

The single currency was 0.04 per cent lower at US$1.1370.

The dropped 0.1 per cent against the yen to 112.29 . The index, which tracks the greenback against a basket of six major rivals, was also 0.1 per cent lower at 96.594.

The yield on benchmark 10-year Treasury notes rose to 3.1073 per cent compared with its US close of 3.136 per cent yesterday.

Oil prices gave up some ground after earlier rising on signals from Saudi Arabia’s that there could be a need for intervention to reduce oil stockpiles.

US crude dipped 0.85 per cent at US$66.76 (RM277.79) a barrel. crude fell 0.6 per cent to US$76.43 per barrel.

Spot was flat at US$1,231.75 per ounce. — Reuters

Source: The Malay Mail Online

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