HONG KONG (AFP) – Asian markets stuttered yesterday after New York equities retreated from record highs, with weak economic data around the world offsetting a forecast-beating earnings season.
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 (US).
A dive in German business sentiment – the latest soft reading from the European Union (EU) – 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 yesterday reporting its biggest quarterly contraction since late 2008. The 0.3 per cent drop was also its first negative since the last three months of 2017.
Shanghai was the main loser, ending down 2.4 per cent on concerns the Chinese government could ease up on a recent run of mini stimulus measures that have supported the economy and equities in recent months.
Hong Kong fell 0.9 per cent, Seoul dropped 0.5 per cent and Singapore was off 0.2 per cent, with Manila and Jakarta also lower. However, Tokyo edged up 0.5 per cent, Taipei added 0.1 per cent and Mumbai put on 0.3 per cent.
Sydney and Wellington were closed for a public holiday.
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.”