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Asian markets tanked Thursday after a
below-par US jobs report compounded worries about the world’s top economy,
while the WTO fanned fresh trade war fears by allowing Washington to impose
tariffs on the European Union.
Investors tracked yet another plunge in Europe and on Wall Street — where
all three main indexes fell more than one percent for a second day — and
shifted into safer assets such as gold which rose more than one percent.
On Wednesday data from payrolls firm ADP showed US companies added far
fewer jobs than expected last month, while August’s reading was also revised
sharply lower. That followed news of the weakest US manufacturing conditions
since 2009 at the height of the financial crisis.
The figures also come before the release of non-farm payrolls data Friday
that are closely watched for a gauge on the health of the economy, with
observers now fretting that a slowdown across the world could now be biting
in the United States.
New York traders rushed for the exit, as did their European counterparts
who were also hammered by fears Britain will leave the EU without a divorce
deal as well as increasingly bleak economic data in the region.
“The market was still digesting the weaker (factory) data and the
implication for global growth then got whacked with the slide on the ADP data
compounded by a catastrophic decline in US auto sales, which now raises more
questions than answers about the resilience of the US consumer,” said Stephen
Innes, Asia-Pacific market strategist at AxiTrader.
Hopes for a China-US trade breakthrough “could keep the risk-on light
flickering, but the dreary economic data does perhaps suggest that traders
could be better sellers in this risk-toxic environment”, he added.
– Brussels cool on Brexit plan –
Just as Washington and Beijing prepare for high-level trade talks this
month, the World Trade Organization provided markets with a fresh headache by
ruling that the EU had given illegal support to plane-maker Airbus, allowing
the US to impose billions in tariffs on the bloc.
Washington later announced a series of levies starting on October 18.
However, the WTO is due to rule in the next six months on whether to allow
the EU to impose its own huge tariffs the other way over US subsidies to
Boeing, raising the possibility of another bruising trade war between the US
and a key trade ally.
Asian equity markets were all deep in the red. Tokyo went into the break
two percent lower while Sydney shed more than two percent, Wellington lost
1.3 percent and Hong Kong lost 0.7 percent.
Singapore and Taipei shed 0.8 percent each, while Manila and Jakarta were
both off 0.9 percent.
The weak US data has ramped up the possibility the Federal Reserve will cut
interest rates for a third time this month, weighing on the dollar against
most currencies including higher-yielding, riskier units.
It held its ground against the pound after Prime Minister Boris Johnson
published his “final” Brexit proposals and warned the EU that Britain would
leave without a deal on October 31 if the bloc did not accept them.
Brussels reacted coolly to the proposal, raising the likelihood of a messy
divorce just as the British economy comes under strain.
Oil prices edged up but were unable to recover Wednesday’s heavy losses
caused by worries about the effects on demand from the stuttering global
economy.
Both main contracts are now below their levels before last month’s rocket
attack on Saudi crude facilities that wiped out five percent of world
supplies and sent prices soaring.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 2.0 percent at 21,337.94 (break)
Hong Kong – Hang Seng: DOWN 0.7 percent at 25,851.19
Shanghai – Composite: Closed for a public holiday
Dollar/yen: DOWN at 107.15 yen from 107.16 yen
Euro/dollar: UP at $1.0959 from $1.0958 at 2115 GMT
Pound/dollar: UP at $1.2299 from $1.2295
West Texas Intermediate: UP 22 cents at $52.86 per barrel
Brent North Sea crude: DOWN 10 cents at $57.79 per barrel
New York – Dow: DOWN 1.9 percent at 26,078.62 (close)
London – FTSE 100: DOWN 3.2 percent at 7,122.54 (close)
(BSS)
