Asian markets mostly down as global outlook tempers sentiment

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WT24 Desk

HONG KONG – Asian markets stuttered Thursday after New York equities retreated from record highs, with weak economic data around the world offsetting a forecast-beating earnings season, AFP reports.

While the mood on trading floors remains broadly positive after a
blockbuster start to the year, there are lingering concerns that growth in
most parts of the world is well off the pace of the United States.

A dive in German business sentiment — the latest soft reading from the
European Union — a growth forecast cut by the Bank of Canada and a drop in Australian inflation were enough to keep US traders from building on
Tuesday’s records.

“Investors were dealt with another economic reality check as financial
data from Europe remains as sick as ever, this despite a chorus of global
central banks stimulus,” said Stephen Innes at SPI Asset Management.

“The weak EU economy is perhaps raising some doubts as investors spent
most of the day in self-analysis mode while taking stock of their stocks.”

There was further negativity in Asia, with South Korea on Thursday
reporting its biggest quarterly contraction since late 2008. The 0.3 percent
drop was also its first negative since the last three months of 2017.

The data has provided a reality check to investors, who have been on a
buying spree for much of the year, fuelled by optimism that China and the US will hammer out a deal to end their trade war, as well as central bank
dovishness.

Hong Kong was 0.1 percent lower, Seoul dropped 0.2 percent and Shanghai
shed 0.3 percent, while Singapore dipped 0.2 percent while Jakarta was off
0.5 percent. However, Tokyo edged up 0.4 percent by the break and Taipei
added 0.1 percent. Sydney and Wellington were closed for a public holiday.

– ‘Time will tell’ –

OANDA senior market analyst Jeffrey Halley said: “Time will tell if the US
and China lift the rest of the world up or the rest of the world puts the
brakes on the US and China. That’s a story for another day but will
undoubtedly make the second half of 2019 as interesting as the first.”

Broad unease on trading floors weighed on currencies, with the dollar up
against higher-yielding units. The South Korean won shed 0.6 percent, hit by the growth data, while Mexico’s peso shed 0.6 percent and the South African rand dropped 0.7 percent.

On oil markets both main contracts fell again, extending Wednesday retreat
from 2019 highs, following data showing a rise in US inventories.

However, expectations are for the commodity to resume its upward march
with supplies from OPEC and Russia capped, Venezuela embroiled in crisis and Libya hit by unrest.

Meanwhile, the US removal of waivers that allowed countries to buy from
sanctions-hit Iran is expected to hit supplies, though analysts are keeping
watch on the region and whether OPEC responds by opening up the taps.

“Frankly, Iran is a smouldering firecracker set in the Middle East powder
keg, suggesting that on the slightest of flare-ups oil prices are gapping
higher,” said Innes.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.4 percent at 22,280.99 (break)

Hong Kong – Hang Seng: DOWN 0.1 at 29,789.68

Shanghai – Composite: DOWN 0.3 percent at 3,190.61

Euro/dollar: UP at $1.1158 from $1.1156 at 2200 GMT

Pound/dollar: UP at $1.2913 from $1.2902

Dollar/yen: DOWN at 112.00 yen from 112.13 yen

Oil – West Texas Intermediate: DOWN 32 cents at $65.57

Oil – Brent Crude: DOWN 30 cents at $74.27 per barrel

New York – Dow: DOWN 0.2 percent at 26,597.05 (close)

London – FTSE 100: DOWN 0.7 percent at 7,471.75 (close)

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