Aftermath of a global equity market sell down (2nd UPDATE)
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Aftermath of a global equity market sell down
PORT MORESBY: Equity market players were globally jolted by a sell down yesterday (Monday March 24, 2019), sending stock-markets plunging significantly.
The sell down was triggered by concerns for a rapidly slowing down of the global economy and poor manufacturing indicators in Europe and the US, possibly heading for a recession.
Here’s a Bloomberg round-up of the global stock markets’ “bloodbath”:
2nd UPDATE
KLCI stays little changed, Asian markets trade mixed
MARKETS
Tuesday, 26 Mar 2019
1:08 PM MYT
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At 12.30pm, the FBM KLCI slid 0.13 points to 1,649.02. Trading volume was 1.24 billion shares valued at RM713.97mil. There were 331 gainers versus 276 decliners and 381 counters unchanged.
Among KLCI-linked counters, Maybank stocks rose four sen to RM9.27, Petronas Chemicals gained two sen to RM9.05 and Digi added two sen to RM4.60.
Declining stocks included Tenaga Nasional sliding six sen to RM12.70, Genting slipping six sen to RM6.80 and MISC shedding four sen to RM6.68.
On the wider exchange, most active counters were Bumi Armada rising 0.5 sen to 20 sen, Sapura Energy slipping 0.5 sen to 34 sen and Naim climbing 1.5 sen to RM1.18.
Key Asian markets showed mixed results with China's markets see continued selling pressure.
The Shanghai Composite Index fell 1% and the CSI300 slid 0.6% while Hong Kong's Hang Seng rose 0.1%.
Japan's Nikkei however jumped 2% and South Korea's Kospi lifted 0.25%.
Oil prices rose on supply cuts although a recovery was capped by signs of economic slowdown. US crude gained 47 cents to US$59.29 a barrel and Brent crude gained 16 cents to US$67.37 a barrel.
In currencies, the ringgit was 0.1% higher against the greenback at 4.0665. It rose 0.25% aginst the pound sterling at 5.3609 and was little changed against the Singapore dollar at 3.0130.
1st UPDATE
Asian shares edge up as U.S. bond yields come off late-2017 lows(Update)
MARKETS
Tuesday, 26 Mar 2019
9:28 AM MYT
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| MSCI's broadest index of Asia-Pacific shares outside Japan rebounded 0.3 percent after losing 1.4 percent in the previous session. Australian shares were flat, while Japan's Nikkei jumped 1.8 percent after recording its biggest drop since late December on Monday. China's blue-chip CSI300 and Hong Kong's Hang Seng Index also rose, by 0.3 percent and 0.5 percent, respectively. |
MSCI's broadest index of Asia-Pacific shares outside Japan rebounded 0.3 percent after losing 1.4 percent in the previous session.
Australian shares were flat, while Japan's Nikkei jumped 1.8 percent after recording its biggest drop since late December on Monday.
China's blue-chip CSI300 and Hong Kong's Hang Seng Index also rose, by 0.3 percent and 0.5 percent, respectively.
Wall Street shares were little changed on Monday with the S&P 500 ending with a small loss of 0.08 percent.[.N]
U.S. stock futures rose, with E-Minis for the S&P 500 tacking on one-third of a percent.
Investors have been spooked by sharp falls in U.S. bond yields and an inversion of the U.S. Treasury yield curve, which is widely seen as an indicator of an economic recession.
The 10-year U.S. Treasury yield edged up to 2.430 percent, having shed 5 basis points on Monday.
It has fallen about 18 basis points since the Federal Reserve last week ditched projections for raising rates this year and announced the end of its balance sheet reduction, citing signs of an economic slowdown.
"The U.S. yield curve continues to invert," said Michael Every, Hong Kong-based senior Asia-Pacific strategist at Rabobank.
"This is not a healthy sign, as bond-market watchers should know and equity-market obsessives should rapidly learn," he said in a note. "How much further will this run before we see markets starting to do the same?"
The 10-year yield fell below the yield for three-month bills on Friday for the first time since 2007, inverting the yield curve.
San Francisco Fed researchers have said that the difference in those two maturities was the most useful for forecasting a recession.
"I think the market has overreacted to the yield curve inversion because the San Francisco Fed has said it is the most reliable indicator," said Hiroshi Nakamura, senior manager of investment planning at Mitsui Life.
"I expect some correction to the latest rally in bonds. For now we have to see this week's auctions," he said.
FACTORING IN A RATE CUT
The Treasury Department will sell $113 billion in coupon-bearing supply this week, including $40 billion in two-year notes on Tuesday, $41 billion in five-year notes on Wednesday and $32 billion in seven-year notes on Thursday.
Investors will also be watching Fed policymakers scheduled to speak on Tuesday.
U.S. economic growth could be "pretty weak" in the first quarter but will likely much closer to 2-2.5 percent for the rest of the year, but a central bank pause is the responsible thing to do, Fed Bank of Boston president and CEO Eric Rosengren said at a conference in Hong Kong.
Fed funds rate futures are now fully factoring in a rate cut later this year, with about an 80 percent chance of a move priced in by September.
In the currency market, the fall in U.S. yields undermined the dollar's yield attraction.
The euro stood at $1.1315, having gained a tad on Monday after Germany's IFO Institute said its business climate index rose to 99.6, beating a consensus forecast of 98.5 and ending six consecutive months of decline.
The dollar was a shade higher at 110.10 yen, after having hit a 1 1/2-month low of 109.70 on Monday.
"While dollar/yen hasn't fallen greatly and things aren't in panic mode, a sense of caution about where things are going has taken hold," said Shusuke Yamada, chief Japan currency and equity strategist at Bank Of America Merrill Lynch.
The British pound stood at $1.3195, erasing small gains made after lawmakers voted to wrest control of the Brexit process from Prime Minister Theresa May's government for a day.
May said on Monday there was not yet enough support to put her Brexit deal to a third vote in parliament.
Oil prices hovered below their recent four-month peaks, as the prospect of tighter U.S. crude supply was offset by concerns about a slowdown in global economic growth.
U.S. crude futures traded at $59.21 per barrel, up nearly 0.7 percent on day, a tad below Thursday's high of $60.39, its highest since mid-November.
Brent futures were up 0.2 percent at $67.33.
Gold was slightly lower at $1,320.90, not far off a near one-month peak of $1,324.60 scaled during the previous session. - Reuters
Earlier report
Asian shares shaky as US bond yields hit lowest since late 2017
TOKYO: Asian shares were shaky on Tuesday after U.S. Treasury yields sank to their lowest since late 2017, further below short-term interest rates and adding to fears of a U.S. recession.
MSCI's broadest index of Asia-Pacific shares outside Japan was flat in early trade after two days of losses. Japan's Nikkei rebounded 1.1 percent after a 3.0 percent fall on Monday.
Wall Street shares were little changed on Monday with the S&P 500 ending with a small loss of 0.08 percent.
Investors have been spooked by sharp falls in U.S. bond yields and an inversion of the U.S. Treasury yield curve, which is widely seen as an indicator of an economic recession.
The 10-year U.S. Treasury yield dropped to 2.405 percent, having shed 5 basis points on Monday.
It has fallen more than 20 basis points since the Fed last week ditched projections for raising rates this year and announced the end of its balance sheet reduction, citing signs of an economic slowdown.
The 10-year yield fell below the yield for three-month bills on Friday for the first time since 2007, inverting the yield curve.
San Francisco Fed researchers have said that the difference in those two maturities was the most useful for forecasting a recession.
"I think the market has overreacted to the yield curve inversion because the San Francisco Fed has said it is the most reliable indicator," said Hiroshi Nakamura, senior manager of investment planning at Mitsui Life.
"I expect some correction to the latest rally in bonds. For now we have to see this week's auctions," he said.
The Treasury Department will sell $113 billion in coupon-bearing supply this week, including $40 billion in two-year notes on Tuesday, $41 billion in five-year notes on Wednesday and $32 billion in seven-year notes on Thursday.
Investors will also be watching Fed policymakers scheduled to speak later on Tuesday.
Fed funds rate futures are now fully factoring in a rate cut later this year, with about an 80 percent chance of a move priced in by September.
In the currency market, the fall in U.S. yields undermined the dollar's yield attraction.
The euro stood at $1.1316, having gained a tad on Monday after Germany's IFO Institute said its business climate index rose to 99.6, beating a consensus forecast of 98.5 and ending six consecutive months of decline.
The dollar was little changed at 110.04 yen, after having hit a 1 1/2-month low of 109.70 on Monday.
The British pound stood at $1.3211, erasing small gains made after lawmakers voted to wrest control of the Brexit process from Prime Minister Theresa May's government for a day.
May said on Monday there was not yet enough support to put her Brexit deal to a third vote in parliament.
Oil prices hovered below their recent four-month peaks, as the prospect of tighter U.S. crude supply was offset by concerns about a slowdown in global economic growth.
U.S. crude futures traded at $59.26 per barrel, up 0.5 percent on day, a tad below Thursday's high of $60.39, its highest since mid-November.
Brent futures were up 0.3 percent at $67.42 a barrel. - Reuters/The Star
Rude awakening for Asia as volatility spikes back
MARKETS
Monday, 25 Mar 2019
5:53 PM MYT
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The MSCI Asia Pacific Index slumped 2.1 percent on Monday, heading for its biggest decline since October and erasing monthly gains. Shares in China, Hong Kong and Japan lost 2 percent or more, with S&P 500 Index futures dropping as much as 0.7 percent.
That’s pushed indexes of equity swings to jumps not yet seen this year. The Nikkei Stock Average Volatility Index soared as much as 31 percent, with similar gauges for Hong Kong, South Korea and Australia also surging.
The spiking volatility indicators herald a rude awakening for traders that had been lulled into complacency as equities around the world rallied through much of the first quarter.
The Shanghai Composite Index, the world’s worst-performing major stock gauge in 2018 with a 25 percent loss, pulled an almost complete 180 with a 24 percent rally this year through Friday.
Optimism of a tidy resolution on the U.S.-China trade negotiations and more dovish overtures from the Federal Reserve helped keep investors buying, while in Asia a resurgence of technology shares served as the largest drivers for gains to this point.
Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. joined a rebound in global chipmakers, while Tencent Holdings Ltd., the biggest component of the regional benchmark, bounced back from its worst-ever annual loss last year.
But all along, concerns over the strength of the economic expansion have been lingering. Comments last week from Fed Chair Jerome Powell indicating the central bank planned to hold off on interest-rate increases this year, which seemingly confirmed the dovish stance that helped stoke the rally, raised fears of a U.S. slowdown.
Those worries only worsened on Friday, when manufacturing indicators in Europe and the U.S. proved poor and the Treasury yield curve inverted for the first time since 2007. Bond yields pushing lower from Japan to Germany -- Australia’s 10-year benchmark rate hit a record low Monday -- are creating a fresh feedback loop of investor concern over growth, if not outright recession.
“I’ve repeatedly stated that bond markets globally, along with dovish central banks, have been telling us a slowdown is on the way,” said Jeffrey Halley, senior market strategist with Oanda in Singapore.
“The U.S. can at least cut rates and apply monetary tools. Things could be worse for Europe and Japan, where they cannot. Until the U.S.-China trade talks conclude for better or worse, it’s too soon to predict how deep the coming slowdown will be or even when it will occur.”
The MSCI Asia Pacific Index, which was up 1.7 percent for March through Friday, is now heading for a 0.4 percent monthly decline, its first since December.
Stock-Market Summary
• MSCI Asia Pacific Index down 2%
• Japan’s Topix index down 2.5%; Nikkei 225 down 3%
• Hong Kong’s Hang Seng Index down 2%; Hang Seng China Enterprises down 2.5%; Shanghai Composite down 2%; CSI 300 down 2.4%
• Taiwan’s Taiex index down 1.5%
• South Korea’s Kospi index down 1.9%; Kospi 200 down 2%
• Australia’s S&P/ASX 200 down 1.1%; New Zealand’s S&P/NZX 50 down 0.3%
• India’s S&P BSE Sensex Index down 1.2%; NSE Nifty 50 down 1.1%
• Singapore’s Straits Times Index down 1.1%; Malaysia’s KLCI down 1.1%; Philippine Stock Exchange Index down 1.9%; Jakarta Composite down 1.9%; Thailand’s SET down 1.6%; Vietnam’s VN Index down 1.9%
• S&P 500 e-mini futures down 0.4% after index closed down 1.9% in last session - Bloomberg/The Star
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