TOKYO, Oct 15, 2018 (BSS/AFP) – Asian stocks opened the week on the back
foot Monday, with investors still in gloomy mood after several days of market
turbulence sparked by trade rows and a spat over the US central bank.
Japanese equities led the way lower, with the benchmark Nikkei 225
shedding almost two percent, not helped by reports that Prime Minister Shinzo
Abe would later Monday announce a hike in sales tax.
“We have never seen a share price rise in the past after an announcement
of a sales tax hike,” noted Kyoko Amemiya, senior market strategist at SBI
Securities.
Chinese stocks, which were the worst hit in last week’s global rout, also
opened lower, but only by 0.04 percent and the broader Shenzhen Composite
Index was in the green.
Markets in Hong Kong, Australia and South Korea also drifted lower.
“We can’t say the shock is over,” said Masayuki Kubota, chief strategist
at Rakuten Securities.
Last week saw a broad-based sell-off in global equities, prompted by fears
of higher US interest rates, continued worries over US-China trade and
attacks by President Donald Trump on the Federal Reserve, which he called
“crazy”.
On Friday, the bulls attempted a fight-back but found it hard going in
another seesaw session. Early European gains fizzled and the Dow Jones closed
up 1.2 percent following late buying but it also dipped into the red for part
of the session.
This week, traders are expected to focus on a raft of economic data and
dozens of company results.
Turning to commodities, oil prices continued to soar as traders fretted
over US relations with its ally and world’s top oil producer Saudi Arabia.
Trump has warned of “severe punishment” if it is revealed that journalist
Jamal Khashoggi was murdered inside the Kingdom’s consulate in Istanbul but
Riyadh hit back immediately, saying it would retaliate.
Both Brent Crude and WTI oil prices surged, which was also a factor in
declining stocks, analysts said.
On the foreign exchange markets, the pound was hit by further uncertainty
over Brexit talks after last-ditch negotiations between London and Brussels
failed to make headway on the vexed question of the Northern Irish border.
There were also reports that Prime Minister Theresa May could be the
victim of a cabinet rebellion and that her coalition partner, the Northern
Irish Democratic Unionist Party (DUP), could vote down her budget, possibly
triggering another election.
Sterling sank in Asian trade at the beginning of a make-and-break week for
the British currency.
“There remains a huge amount to play for this week and sterling will
likely be significantly higher or lower than it is now by the end of the
week,” said Ray Attrill, head of FX Strategy at National Australia Bank.
– Key figures around 0130 GMT –
Tokyo – Nikkei 225: DOWN 1.8 percent at 22,293.67
Hong Kong – Hang Seng: DOWN 0.5 percent at 25,683.59
Shanghai – Composite: FLAT at 2,605.91
Euro/dollar: DOWN at $1.1550 from $1.1559 at Friday’s close
Pound/dollar: DOWN at $1.3110 from $1.3154 at Friday’s close
Dollar/yen: DOWN at 112.08 from 112.18 yen at Friday’s close
Oil – West Texas Intermediate: UP 78 cents at $72.07 per barrel
Oil – Brent Crude: UP 77 cents at $81.45 per barrel
New York – Dow Jones: UP 1.2 percent at 25,339.99 (close)
London – FTSE 100: DOWN 0.2 percent at 6,995.91 (close)