Asia Stocks Fall on Concerns Over Global Economic Momentum
Hong Kong, September 6 (Reuters) – Asia stocks declined on Wednesday amid worries about slowing growth in China and Europe, raising concerns about global economic momentum. Meanwhile, the dollar strengthened as investors analyzed the outlook for Federal Reserve interest rates.
London and U.S. markets are expected to open lower, with FTSE futures and E-mini futures for the S&P 500 index down 0.42% and 0.13%, respectively, at 0520GMT.
MSCI’s gauge of Asia Pacific stocks outside Japan showed a decline of 0.45%. The Hang Seng Index lost 0.56%, and China’s benchmark CSI300 Index fell 0.59%. Analysts are expecting China’s August trade data, set to be released on Thursday, to show further declines in exports and imports, albeit at a slower pace.
Investor sentiment was dampened by a private-sector survey on Tuesday, which revealed that China’s services activity expanded at its slowest pace in eight months in August, indicating weak demand.
“The China decline was bigger than expected,” stated Redmond Wong, Greater China market strategist at Saxo Markets. “The Chinese government has become more active and is relaxing more regulation, but whether it is good enough remains to be seen,” he added.
In the coming days, China is also set to release lending and inflation data.
Manufacturing data from Germany, Britain, and the euro zone also exhibited declines, with their service sectors entering into contraction.
“The Europe data was rather weak. We think there is still a high chance of a mild recession in the U.S. and Europe toward the end of the year or the beginning of next year,” said Wong.
Australia’s S&P/ASX 200 extended losses to 0.76%, even though second-quarter gross domestic product exceeded forecasts with a 0.4% rise.
Japan’s Nikkei 225 share average stood out by gaining 0.52%, with the weakest yen rate since November boosting exporters such as automakers, while energy shares outperformed amid a surge in crude oil prices.
The yield on the benchmark U.S. 10-year Treasury note rose 9 basis points to 4.26% after reaching 4.268%, its highest level since August 25. Meanwhile, the U.S. dollar rose to a near six-month high against a basket of currencies.
Investors are currently digesting recent signals regarding potential U.S. interest rate hikes. Fed Governor Christopher Waller stated on Tuesday that the latest round of economic data provides the U.S. central bank with space to evaluate if it needs to raise rates again.
“[The] Fed is a focus for us, we think they have more work to do with potential for U.S. rates to continue heading higher,” said John Milroy, an investment adviser at Ord Minnett.
“The BlackRock Investment Institute stated in a note on Wednesday, “We see central banks being forced to keep policy tight to lean against inflationary pressures.”
The Institute for Supply Management (ISM) is scheduled to release U.S. services PMI on Wednesday.
U.S. crude was up 0.06% at $86.74 a barrel, while Brent gained 0.07% to trade at $90.10 a barrel.
Oil prices surged over 1% in the previous session as concerns about a supply shortage mounted after Saudi Arabia and Russia extended their voluntary supply cuts until the end of the year.
Spot gold rebounded and was up 0.09% at $1,927.79 per ounce by 0534 GMT, after suffering its biggest one-day loss since August 1 on Tuesday.
Reporting by Kane Wu; Editing by Edmund Klamann and Sam Holmes
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