HONG KONG, Jan 2, 2019 (BSS/AFP) – Asian markets sank Wednesday, starting
the new year by extending a slide that made 2018 the worst in a decade, with
investors jolted by data reinforcing weakness in China’s economy.
With a number of potential banana skins dotting the next 12 months —
including the China-US trade row and Brexit — dealers are keeping to the
sidelines as they look for signs of stability.
Hong Kong led the losses, tumbling more than two percent, while Shanghai
shed one percent after two indicators showed Chinese manufacturing activity
shrank in December.
The readings, from the government and another a private survey, are the
latest to highlight problems in the world’s number two economy following a
slew of downbeat figures including on trade, factory output and inflation.
“The disappointment that came through in December has transferred into
January as well,” Jingyi Pan, a market strategist at IG Asia, told Bloomberg
News.
She added that the reading was a reminder of the US-China trade tensions
and “brings back to the surface worries on growth”.
There were also market losses in Sydney, which dropped 0.7 percent, while
Seoul shed one percent and Singapore slipped 0.9 percent. Taipei and Jakarta
also fell. Tokyo and Wellington were closed for public holidays.
– Trump deal call –
Investors were also spooked by the ongoing US government shutdown, which
is now in its second week.
Donald Trump on Tuesday invited leaders from both parties to talks to end
the standoff but with Democrats refusing to pass any budget that would fund
the president’s Mexican border wall there is little optimism a deal can be
made.
For their part, Democrats, who take over the House of Representatives on
Thursday, have lined up spending bills without addressing the wall.
Trump appeared to strike a more conciliatory tone on Twitter by reaching
out to Nancy Pelosi, who is set to become House Speaker again.
“Border Security and the Wall ‘thing’ and Shutdown is not where Nancy
Pelosi wanted to start her tenure as Speaker! Let’s make a deal?” he tweeted.
Also on the radar are trade talks between China and the US, which are set
to begin this month, with Trump hailing “big progress” on the issue at the
weekend. The president and his Chinese counterpart Xi Jinping agreed last
month to a 90-day halt in their painful tariffs spat so they could resolve
their differences.
Immediate attention is now on the release Friday of US jobs data, which
could provide fresh evidence of the state of the world’s top economy.
A strong reading would put pressure on the Federal Reserve to continue to
lift interest rates, a negative for stock markets, which were battered last
year partly by concerns about the rising cost of borrowing.
– Key figures around 0230 GMT –
Hong Kong – Hang Seng: DOWN 2.5 percent at 25,195.33
Shanghai – Composite: DOWN 1.0 percent at 2,468.69
Tokyo – Nikkei 225: Closed for public holiday
Euro/dollar: DOWN at $1.1450 from $1.1460 at 2120 GMT on Monday
Dollar/yen: DOWN at 109.45 yen from 109.58 yen
Pound/dollar: DOWN at $1.2738 from $1.2752
Oil – West Texas Intermediate: DOWN 11 cents at $45.30 per barrel
Oil – Brent Crude: DOWN 29 cents at $53.51 per barrel
New York – Dow: UP 1.2 percent at 23,327.46 (close)
London – FTSE 100: DOWN 0.1 percent at 6,728.13 (close)