TOKYO, Dec 18 ― Asian share markets slumped today as heightened concerns about a slowing global economy sent Wall Street stocks skidding to their lowest levels in more than a year.
MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.3 per cent in mid-morning trade while Japan's Nikkei tumbled 1.2 per cent by the midday break.
Chinese shares opened in negative territory with the blue-chip index down 0.3 per cent and Hong Kong's Hang Seng index flat, while Australian shares fell 0.8 per cent.
MSCI's broadest gauge of the world's stock markets, ACWI , was down 0.05 per cent today, after having hit its weakest level since May 2017 the previous day. It has declined 16 per cent from a top hit on January 29.
US stock futures rose 0.4 per cent in Asia following the previous session's sharp sell-off.
Yesterday, the S&P 500 lost 2.08 per cent to hit its lowest since October 2017 as it breached lows reached during a sell-off in February, having wiped out about US$3.4 trillion (RM14.2 trillion) of market value since late September.
The Nasdaq Composite dropped 2.27 per cent, with Amazon, one of the best performing shares this year, sliding 4.5 per cent.
A profit warning from ASOS, a previously high-flying UK online-clothing retailer, shocked investors, sending US consumer discretionary shares down 2.8 per cent.
“US retailers have been stocking up consumer goods from China before hikes in tariff, piling up inventories. From now their costs are seen rising next year. That may have been kind of known to everyone but it's becoming reality,” said Tatsushi Maeno, senior strategist at Okasan Asset Management.
In addition, the National Association of Home Builders Housing Market Index indicated US homebuilder sentiment had fallen to a three-and-a-half-year low. It was the second consecutive month of disappointing reading.
The gloomy data came after weak economic news from China and Europe late last week.
The 10-year US Treasuries yield dropped to 2.853 per cent, edging near a December 10 low of 2.825 per cent, its lowest level since late August.
Focus shifts to Fed
The Federal Reserve is widely expected to raise interest rates tomorrow, which would be its fourth hike this year.
But many investors now expect signs of economic turbulence to prompt the Fed to signal a slowdown in the pace of tightening next year.
Yesterday, US President Donald Trump and his top trade adviser ratcheted up their criticism of the central bank's monetary tightening.
“It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!” Trump wrote in a tweet.
White House trade adviser Peter Navarro amplified those remarks a few hours later, calling the Fed “crazy” for having signalled that it would continue to raise rates next year.
The Fed said in September that its policymakers see three more rate hikes in 2019 while money market futures are pricing in less than one such move.
“The major event between now and the end of the year is going to be what the Fed does tomorrow,” said Jim McCafferty, Hong Kong-based head of Asia-ex-Japan equity research at Nomura.
“Given the pace of change of sentiment seen from not just companies but (also) from major macro-economies, I think there might be an outside chance that the Fed gives a more muted message in terms of growth and how aggressive it will be in terms of future rate hikes,” he added.
The spectre of a “dovish rate hike” kept the dollar in check.
The euro traded slightly higher at US$1.1355, after having gained 0.40 per cent yesterday.
The greenback gave up 0.1 per cent against the Japanese yen to ¥112.70, adding to yesterday's fall of nearly half a per cent.
The offshore Chinese yuan was slightly stronger at 6.8900 to the dollar.
Investors are awaiting details of a speech by President Xi Jinping to mark the 40th anniversary of China's market reforms.
China is also expected to hold its annual Central Economic Work Conference later this week, where key growth targets and policy goals for 2019 will be discussed.
Oil prices extended losses on signs of oversupply in the United States and as investor sentiment remained under pressure from concern over global economic growth and fuel demand.
US crude fell as low as US$49.01 per barrel yesterday, its lowest since September last year and last stood at US$49.37, down 1.0 per cent on the day.
Brent crude oil futures lost 65 cents, or 1.1 per cent, to US$58.96 per barrel. ― Reuters
