China lockdowns, rate hike fears batter stock markets

HONG KONG - Stock markets sank Monday on growing concerns that lockdowns in China aimed at fighting a worsening Covid outbreak could threaten the country's economy and global supply chains.

The losses extended a sell-off across the world last week fuelled by comments from Federal Reserve boss Jerome Powell indicating officials will hike interest rates by half a point next month and possibly several times more by year's end.

China's struggle to get a grip on a Covid outbreak that has forced Shanghai -- the country's biggest city -- into lockdown and dealing a blow to demand.

Officials in the finance hub reported 51 deaths Monday, its highest daily toll despite weeks of strict containment measures, while Beijing warned of a "grim" situation as infections rise.

The lockdowns will "cause a logistical problem that's going to affect not just China but also the rest of the world", OANDA's Jeffrey Halley told Bloomberg TV.

Officials' determination to continue with a zero-Covid policy as well as a lack of government stimulus, "that all points to lower China stocks and we are going to see a weaker yuan going forward".

Investors were already fleeing risk assets as they become worried that the Fed tightening -- to fight inflation at more than 40-year highs -- will knock the pandemic economic recovery off course and dent companies' bottom line.

With earnings season under way, a close eye is being kept on what firms say about the impact on and the outlook for business in light of inflation, forecast rate hikes, supply chain snarls and the Ukraine war.

"Having spent most of the last few weeks trying to put to one side concerns about events in eastern Europe, a slowdown in China, and the increasing risks of what inflation might do to company earnings, as well as consumer incomes, the final straw appears to be a concern about the prospect of a policy mistake by central banks, and a possible recession by the end of the year," said Michael Hewson of CMC Markets.

And Geir Lode, at Federated Hermes, added: "There has been little to avert the investor pessimism as inflation and interest rate expectations start to bite.

"In particular due to the uncertainty of the macro environment, expectations are low with regard to forward estimates and guidance, building on lowered expectations from the previous quarter."

All three main indexes on Wall Street ended more than two percent down Friday, and Asia followed suit with hefty losses.

Hong Kong and Shanghai led the selling, with both markets suffering hefty losses, while Tokyo, Seoul, Singapore, Taipei, Mumbai, Bangkok and Jakarta were also deep in the red.

London, Paris and Frankfurt were sharply lower in the morning.

Sydney and Wellington were closed for holidays.

The hit to demand for energy in China also dragged on crude. WTI fell below $100 a barrel, even as the war in Ukraine hits supplies of the black gold owing to embargoes on Russian exports.

"Oil is rerating lower due to the China consumption hit while the Federal Reserve is raising interest rates to slow down the US economy," said Stephen Innes at SPI Asset Management.

"Those are two gusty headwinds suggesting some oil bulls will give way to recession fears and demand devastation."

On currency markets, the euro was unable to hold a brief rally that came on the back of Emmanuel Macron's victory in France's presidential election, seeing off far-right challenger Marine Le Pen.

Agence France-Presse

Asia markets dive as volatility sweeps globe ahead of Fed meeting

HONG KONG - Asian markets plunged Tuesday following a highly volatile day on Wall Street fuelled by fears about the Federal Reserve's plans to hike interest rates, with attention lasered on its upcoming two-day policy meeting.

A disappointing start to the corporate earnings season, as well as growing concern about Russia's troop build-up on Ukraine's border and warnings of a possible invasion were also dragging on sentiment.

After spending much of last year playing down the spike in prices, the US central bank has in recent months taken a sharp hawkish turn on monetary policy as officials look to bring inflation -- which is at a four-decade high -- under control.

Minutes from the most recent meeting indicate it will begin lifting interest rates from March with three or possibly four more hikes before the end of the year. On top of that, it plans to start offloading its vast bond holdings.

But while the move to battle runaway prices is seen as crucial, the end of the era of ultra-cheap cash for investors has rattled markets after almost two years of uninterrupted gains to record or multi-month highs.

All attention is on the Fed gathering that starts later in the day, with investors poring over every word from the bank's statement and boss Jerome Powell's subsequent news conference.

"The Fed is scrambling to control inflation and markets have gone from expecting a gradual interest rate hiking cycle to an accelerated tightening action until inflation eases," said OANDA's Edward Moya.

"Some economists think the Fed needs a half-point rate increase in March to show they are serious about tackling inflation and signal that more are coming."

He added that officials need to "send a message they are tackling inflation, but they don't need to overcommit themselves. The Fed's best option is to signal they will raise rates by 25 basis points in March and signal another one is coming in May. Inflation may show its peak around then and they may not need to be as aggressive going forward."

Wall Street's three main indexes have had a particularly rough time, with the Nasdaq down more than 10 percent from recent peaks, putting it in correction territory.

And on Monday they saw some wild gyrations, suffering intra-day losses before dip-buying saw them all surge in the last hour to end in positive territory.

London, Paris and Frankfurt tanked Monday, without enjoying any recovery, with eyes on eastern Europe as the United States said 8,500 troops were put on standby for possible deployment to boost NATO as fears grow that Russian President Vladimir Putin is planning to invade Ukraine.

But all three markets rose in opening trade Tuesday.

"Volatility is back," Lori Calvasina, at RBC Capital Markets, told Bloomberg Television. "We're having a sea-change in terms of Fed policy. Equity investors frankly have been behind the curve in anticipating what's coming, so there's a lot of catch-up to do."

Asia spent all Tuesday well in the red with Tokyo down 1.7 percent as Hong Kong shed 1.7 percent, while Singapore, Taipei and Jakarta were also off more than one percent.

Sydney shed 2.5 percent after higher-than-forecast Australian core inflation figures ramped up bets on a rate hike by the country's central bank. 

Shanghai and Seoul fell more than two percent, with Wellington, Mumbai and Bangkok also down.

While there is a general consensus that the long-term outlook for markets remains positive -- thanks to reopenings, vaccination programmes and the less-severe Omicron variant -- many also warn of more near-term upheaval.

Jeremy Siegel, at the Wharton School of the University of Pennsylvania and author of "Stocks for the Long Run", said: "I'm still very positive on long-term equities but I think it's in for a rocky time the next two or three months.

"We have to get used to the fact that the Fed is going to be much more hawkish."

Agence France-Presse

Asian shares on edge as day of Fed chair speech arrives

HONG KONG - Asian shares were mixed on Friday morning as slight gains in China were balanced by declines elsewhere and investors globally turned cautious ahead of a long-awaited speech by Fed Chair Jerome Powell.

Remarks from the Federal Reserve's more hawkish policy makers and a deadly attack in Afghanistan also subdued sentiment and helped the dollar gain against a basket of its peers.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.1% while Japan's Nikkei shed 0.46%.

Australian shares fell 0.18%, and Hong Kong and Korea were flat.

However, in a reversal of recent weeks where Chinese stocks weighed on the region, Chinese blue chips gained 0.57% after China's central bank made its biggest weekly cash injection into the banking system since February.

"There are three things that are conspiring at the moment to sap sentiment," said Kyle Rodda, an analyst at IG markets. 

He was referencing a weak lead from Wall Street after the attack in Afghanistan, the fact Asian markets had been lagging this week because investors were nervous about the potential for future regulatory crackdowns in China, and caution ahead of the upcoming Jackson Hole Symposium.

Powell is set to speak at 1400 GMT in the Kansas City Fed's central banking conference, an event normally held in Jackson Hole, Wyoming, which has been often used by Fed policymakers in the past to provide guidance on their future policy.

Traders will analyze Powell's words for any hints about when the Fed will begin tapering its asset purchasing program.

Analysts at RBC said in a note that while much of the summer had been spent waiting for the event, there was "skepticism that the Fed will provide more specific information around a timetable... amidst a rise in Delta variant COVID cases."

Islamic State struck the crowded gates of Kabul airport in a suicide bomb attack on Thursday, killing scores of civilians and at least 13 U.S. troops.

This, along with public remarks by the U.S. Federal Reserve's hawkish wing urging the central bank to begin paring bond purchases contributed to Wall Street closing slightly lower, ending a streak of all-time closing highs.

The Dow Jones Industrial Average fell 0.54%, the S&P 500 lost 0.58%, and the Nasdaq Composite dropped 0.64%.

Dallas Fed President Robert Kaplan said he believed the progress of economic recovery warrants tapering of the Fed's asset purchases to commence in October or shortly thereafter, following earlier comments from St. Louis Fed President James Bullard, who said the central bank was "coalescing" around a plan to begin tapering.

Early in Asian hours, U.S. stock futures, the S&P 500 e-minis, were flat.

The yield on benchmark 10-year Treasury notes was 1.3441% down from a two-week high of 1.375% set the day before, as traders were cautious ahead of Powell's speech.

The dollar when measured against a basket of currencies has gained a little from Thursday's lows. The euro traded at $1.1747, having eased from the previous day's high of $1.1779 as a survey showed weaker consumer sentiment in Germany.

U.S. crude ticked up 0.34% to $67.65 a barrel. Brent crude rose 0.25% to $71.27 per barrel, resuming this week's rally after taking a rest on Thursday, as energy companies began shutting production in the Gulf of Mexico ahead of a potential hurricane forecast to hit on the weekend

-reuters 

US stocks edge down on virus woes, slowing economy

NEW YORK - The S&P 500 Index closed slightly lower on Monday after erasing early gains as worries about the Delta variant of the coronavirus and a slowing US economy overshadowed optimism around more fiscal stimulus and a strong second-quarter earnings season.

Federal Reserve Governor Christopher Waller said on CNBC late in the session that the Fed could start to reduce its support for the economy by October if the next two monthly jobs reports each show employment rising by 800,000 to 1 million, as he expects. 

He also suggested the Fed could announce in September it would start to reduce its monthly bond purchases, which could lift yields again - not the best news for the stock market. 

Data earlier in the day showed that although US manufacturing grew in July, its pace slowed for a second straight month as spending rotated back to services from goods, and shortages of raw materials persisted. 

The softer-than-expected data also sent US bond yields to their lowest since July 20 and knocked the blue-chip Dow off an intra-day record high hit in early trading. 

“An issue for the market... is the rise of the growth scare", said Rob Haworth, senior investment strategist at US Bank, "Whether it's more restrictions in China with infections rising in 14 provinces now, or questions about how far is the US going to have to go with mask mandates.”

Only four of the 11 S&P sectors traded higher by market close, among them utilities and real estate generally considered safe bets at a time of uncertainty.

The Dow Jones Industrial Average fell 97.31 points, or 0.28 percent, to 34,838.16, the S&P 500 lost 8.1 points, or 0.18 percent, to 4,387.16 and the Nasdaq Composite added 8.39 points, or 0.06 percent, to 14,681.07. Square Inc, the payments firm of Twitter Inc co-founder Jack Dorsey, jumped after it said it would purchase Australian buy now, pay later pioneer Afterpay Ltd for $29 billion. 

With manufacturing activity data coming in weaker than expected, investor focus now turns to services sector data on Wednesday and the Labor Department's monthly jobs report on Friday.

After mixed quarterly reports from technology behemoths last week, all eyes this week are on earnings from companies including Eli Lilly and Co, CVS Health Corp and General Motors Co.

Volume on US exchanges was 8.80 billion shares, compared with the 9.77 billion average for the full session over the last 20 trading days. 

Declining issues outnumbered advancing ones on the NYSE by a 1.07-to-1 ratio; on Nasdaq, a 1.05-to-1 ratio favored advancers.

The S&P 500 posted 76 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 98 new highs and 67 new lows.

-reuters

Japan Q1 GDP shrinks 1.3 percent, hit by virus restrictions

TOKYO - Japan's economy contracted 1.3 percent in the three months to March after the government reimposed virus restrictions in major cities as infections surged, data showed Tuesday.

The quarter-on-quarter fall came after the world's third-largest economy grew for two quarters to December, but the expansion was stopped in its tracks by a winter increase in coronavirus cases.

The government imposed new virus states of emergency in January in response, urging people to stay at home and calling for restaurants to close earlier.

The measures slowed consumption, hitting growth despite the relative strength of the manufacturing sector.

The 1.3 percent contraction was largely in line with economist expectations.

"Personal consumption has been particularly hard hit by the Covid-19 emergency measures," Naoya Oshikubo, senior economist at SuMi TRUST, said in an analysis issued before the release of the official data.

"On a positive note, private capital investment is expected to continue to pick up as the manufacturing industry as a whole remains strong," Oshikubo said.

Economists warn that the slowdown is likely to continue, with the government forced to impose a third state of emergency in several parts of the country -- including economic engines Tokyo and Osaka -- earlier this month.

The emergency measures are tougher than in the past, and have been extended to the end of May and expanded to several other regions in recent days.

Further complicating the growth picture is Japan's comparatively slow vaccine rollout, said Marcel Thieliant, senior Japan economist at Capital Economics.

"With the medical situation still worsening and the vaccine rollout too slow, it will take until the end of the year for output to return to pre-virus levels," he said in a note.

Agence France-Presse

Stocks move higher on Wall Street, following gains overseas

Stocks headed higher in midday trading on Wall Street Tuesday, adding to the market’s gains from a day earlier, as investors focused on the prospects for an economic recovery as more businesses reopen after being shut down due to the coronavirus pandemic.

The S&P 500 was up 1% and on pace for its third straight monthly gain. The rally follows solid gains in Europe, where indexes marched higher after some encouraging economic data. Bond yields rose slightly, another sign that investors were regaining confidence in the economy.

Technology sector stocks, which led the way higher as the market rebounded the past three months from a 34% plunge, helped power the latest gains. Banks, health care stocks and companies that rely on consumer spending were among the big gainers. Real estate and utilities stocks fell.


Encouraging economic data, including retail sales and hiring, have helped stoke optimism among investors that the reopening of businesses in the U.S. and other countries will pull the economy out of its recession relatively quickly. The market has continued to climb, despite bouts of volatility, even as a rise in new coronvairus cases in the U.S. and other countries clouds the prospects for an economic recovery.

Investors have grown confident that the Federal Reserve and Congress are prepared to continue providing a historic amount of support to the market and economy, said Sam Stovall, chief investment strategist at CFRA.

“All of the negative news has basically been built into share prices,” Stovall said. “If we are to stumble, then the Fed and Congress are likely to step in to put a fiscal and monetary floor underneath the economy and the markets. And now, with the likelihood that the economy will not be shutting down entirely should we end up with a second wave, the market is basically saying it’s ‘onward and upward.’”

The Dow Jones Industrial Average was up 230 points, or 0.9%, to 26,259. The Nasdaq composite, which is heavily weighted with technology stocks, gained 1.4%. The index has only fallen twice so far in June. Small company stocks were also notching solid gains. The Russell 2000 index was up 0.7%.

The yield on the 10-year Treasury note rose to 0.72% from 0.70% late Monday. It tends to move with investors’ expectations for the economy and inflation.

The World Health Organization said over the weekend that the pandemic is still in its ascendancy. The U.S., which is seeing rapid increases in cases across the South and West, has the most infections and deaths by far in the world, with 2.3 million cases and over 120,000 confirmed virus-related deaths, according to a tally by Johns Hopkins University.

Still, investors have been placing more weight on economic data releases that suggest economies that have reopened are making strides to emerge from a deep recession.

On Tuesday, the Commerce Department said sales of new U.S. homes jumped 16.6% in May to an annual rate of 676,000, exceeding Wall Street’s forecasts. Several homebuilders rose. Century Communities was up 1.8%.

Further updates on the U.S. economy are expected toward the end of this week, when the government will issue data on consumer spending, weekly unemployment aid applications and durable goods orders.

European shares advanced after a measure of economic activity in the eurozone, the purchasing managers’ index, rose significantly in June from the month before. The index was just shy of the level that indicates the economy is growing again after a devastating plunge in the spring.

France’s CAC 40 gained 1.4%, while Germany’s DAX rallied 2.1%. Britain’s FTSE 100 rose 1.2%.

Asian markets overcame some early turbulence caused by reported comments by White House trade adviser Peter Navarro suggesting the U.S. trade deal with China was in trouble. President Donald Trump later said the agreement was still on.

Benchmark U.S. crude oil was up 0.1% to $40.77 a barrel. Brent crude, the international standard, was up 0.5% to $43.28 per barrel.

The Associated Press

Dow sinks 1,500 as virus cases rise, deflating optimism

Stocks are falling sharply on Wall Street as coronavirus cases increase again, deflating recent optimism that economy could recover quickly as lockdowns ease. The Dow fell more than 1,500 points and the S&P 500 was on track for its worst day in nearly three months. Many market watchers have been saying that a scorching comeback in the market since late March was overdone and didn’t reflect the dire state of the economy. A day earlier, the Federal Reserve said the road back to recovery would be long. Bond yields fell sharply, a sign of increasing caution among investors.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:


Stocks are down sharply on Wall Street Thursday, pulling the Dow Jones Industrial Average more than 1,500 points lower and placing the S&P 500 on track for its worst day in nearly three months.

The S&P 500 was down 4.7% in afternoon trading, extending its losses into a third straight day. The benchmark index is now on track for its first weekly drop in four weeks.

The selling, which gained momentum as the day went on, comes as recent optimism that the reopening of businesses would drive a relatively quick economic recovery fades amid rising coronavirus cases in many U.S. states and countries.

The pullback marks a reversal for the market, which rallied 44.5% between late March and Monday, a scorching rate that many skeptics said was unsustainable and didn’t reflect the dire condition of the economy. Only a day ago the Nasdaq closed above the 10,000-point mark for the first time.

The Federal Reserve dimmed some of the optimism investors have had about a swift economic rebound Wednesday, warning that the road to recovery from the worst downturn in decades would be long. The central bank also said it doesn’t foresee a rate hike through 2022.

That, coupled with the recent run-up in stock prices, set the stage for the wave of selling Thursday, said Sal Bruno, chief investment officer at IndexIQ.

“It’s not surprising to see a bit of a sell-off, given the furious rally we’ve had coming out of the lows, despite the fact that the economy was not doing great,” Bruno said. “The fact that (the Fed) is talking about keeping interest rates this low through 2022 is a little eye-opening for a lot of folks.”

The Dow was down 1,512 points, or 5.6%, to 25,477. The Nasdaq composite, which was coming off an all-time high, slid 4%. Small company stocks continued to bear the brunt of the selling. The Russell 2000 index was down 5.9%. European and Asian markets also fell.


Nearly all of the companies in the S&P 500 were down. Technology, financial, industrial and health care stocks accounted for much of the market’s broad slide. Energy stocks were the biggest losers as crude oil prices fell sharply. Bond yields fell and the price of gold surged as worried investors shifted money into the traditional safe-haven assets.

Delta Air Lines, Boeing and MGM Resorts International were among the biggest decliners in the S&P 500. Each was down more than 11%.

Emergency rescue efforts by the Fed and Congress helped arrest the market’s staggering 34% skid in February and March. Since then, the market had been riding a wave of investor optimism that the economy will bounce back by the end of the year, if not sooner, as businesses reopen and people go back to work. But confidence in that scenario is waning as infections and fatalities continue to climb in the U.S. and elsewhere.

In the U.S., Texas and Florida were among the states reporting jumps in the number of coronavirus cases after precautions were relaxed last month. The total number of U.S. cases has now surpassed 2 million.

Still, investors are waiting for more data to see whether the spike in COVID-19 cases are a sign of a possible second wave of the infection, said Charlie Ripley, senior investment strategist for Allianz Investment Management.

He’s focusing on updates to job numbers and consumer spending to gauge how well the economy is recovering.

“We think the recovery is largely underway, but there is still some considerable uncertainty on the path we have ahead,” Ripley said. “If we see some more follow-on of people coming back to work and consumer sentiment picking up, that will be a positive sign for a faster recovery.”

Anxious investors shifted more money into government bonds Thursday, sending yields broadly lower. The yield on the 10-year Treasury yield slid to 0.67% from 0.74% late Wednesday, a big move. Last Friday it briefly moved above 0.90%.

Gold for August delivery climbed 1.2% to $1,740.60 an ounce.

Oil prices fell sharply. Benchmark U.S. crude oil for July delivery was down 8.4% at $36.26 a barrel. Brent crude oil for August delivery was off 7.8% at $38.48 a barrel.

Markets in Europe were broadly lower. France’s CAC 40 slid 4.7% and Germany’s DAX dropped 4.5%. Britain’s FTSE 100 fell 4%. Stock markets in Asia closed lower.

The Labor Department said Thursday that about 1.5 million people applied for U.S. unemployment benefits last week, another sign that many Americans are still losing their jobs even as the economy begins to gradually reopen. The latest figure marked the 10th straight weekly decline in applications for jobless aid since they peaked in mid-March when the coronavirus hit hard. Still, the pace of layoffs remains historically high.

Other jobs data have been more encouraging. A report on Friday showed that the U.S. job market surprisingly strengthened last month as employers added 2.5 million workers to their payrolls. Economists had been expecting them instead to slash another 8 million jobs.

That report helped stoke optimism among investors that the economy can climb out of its current hole faster than forecast. But the Fed estimated Wednesday that the economy will shrink 6.5% this year, in line with other forecasts, before expanding 5% in 2021. It also expects the unemployment rate at 9.3%, near the peak of the last recession, by the end of this year. The rate is now 13.3%.

The central bank said it would keep providing support to the economy by buying bonds to maintain low borrowing rates and forecast no rate hike through 2022, which could make it easier for consumers and businesses to borrow and spend enough to sustain an economy depressed by business shutdowns and high unemployment.

The Associated Press 

Continued oil market turmoil weighs on global stocks

Oil-price turmoil gripped markets once more Tuesday, a day after US crude futures crashed below zero for the first time as the coronavirus crisis crippled global energy demand and worsened a supply glut.

The commodity rout also sent world equity markets spiraling lower, as investors fretted it could compound an expected deep global economic downturn.

The benchmark WTI price collapsed Monday to an unprecedented low of minus $40.32. Negative prices mean traders must pay to find buyers to take physical possession of the oil -- a job made difficult with the world's storage capacity at bursting point.

A day after its historic slide into negative territory amid a supply glut, US oil futures finished in positive territory.

But the market remained under heavy pressure due to the oversupply as coronavirus shutdowns constrain global growth.

Storage is a particularly big problem in the US where WTI oil is delivered at a single, inland point.

In Europe, where Brent is the benchmark, there are several delivery sites and their proximity to the sea allows some of it to be stored on tankers.

"Players are now paying buyers to take oil volumes away as the physical storage limit will be reached. And they are paying top dollar," said Rystad Energy analyst Louise Dickson.

This week's massive sell-off came just ahead of Tuesday's expiration of the May contract. Most trading has now moved to the June contract, and May WTI was back in positive territory by the close of New York trading.

- 'Slice of pizza' -

Oil markets have been ravaged this year after the pandemic was compounded by a price war between Saudi Arabia and Russia.

"Ever thought that it could be imaginable to see the price of US oil valued at less than a pizza? Or even a slice of pizza? How about for it to actually cost (money) to sell US crude?" said Jameel Ahmad, head of currency strategy and market research at FXTM.

While the two big oil-producing nations have drawn a line under the dispute and agreed with other countries to slash output by almost 10 million barrels a day, that is not enough to offset the lack of demand and prices have remained low.

European benchmark Brent North Sea oil for June delivery tumbled to an 18-year low, before coming off worse levels in volatile deals.

- Stock markets sink -

Equity markets were meanwhile also deep in the red on Tuesday, having enjoyed a healthy couple of weeks thanks to massive stimulus measures and signs of an easing in the rate of new infections globally.

Key eurozone stocks markets closed with declines of up to four percent, while London did a little better thanks to a weaker pound.

On Wall Street, the Dow finished down more than 630 points, or 2.7 percent.

"Continued dysfunction in the crude oil markets" was the main factor behind the decline, analysts at Charles Schwab said, "while the Street continues to assess the timing of when the US economy may be able to reopen."

Analysts warned the drop in stock markets could be an indication that the recent surge may have been hasty, and that another prolonged sell-off is possible.

- Key figures around 2030 GMT -

West Texas Intermediate (May delivery): UP at $10.01 per barrel

West Texas Intermediate (June delivery): DOWN 43 percent at $11.57 per barrel

Brent North Sea crude (May delivery): DOWN 22.1 percent at $19.93

Brent North Sea crude (June delivery): DOWN 24.4 percent at $19.33

New York - Dow: DOWN 2.7 percent at 23,018.88 (close)

New York - S&P 500: DOWN 3.1 percent at 2,736.56 (close)

New York - Nasdaq: DOWN 3.5 percent at 8,263.23 (close)

London - FTSE 100: DOWN 3.0 percent at 5,641,03 points (close)

Frankfurt - DAX 30: DOWN 4.0 percent at 10,249.85 (close)

Paris - CAC 40: DOWN 3.8 percent at 4,357.46 (close)

EURO STOXX 50: DOWN 4.1 percent at 2,791.34 (close)

Tokyo - Nikkei 225: DOWN 2.0 percent at 19,280.78 (close)

Hong Kong - Hang Seng: DOWN 2.2 percent at 23,793.55 (close)

Shanghai - Composite: DOWN 0.9 percent at 2,827.01 (close)

Euro/dollar: DOWN at $1.0859 from $1.0862 at 2100 GMT

Dollar/yen: UP at 107.77 yen from 107.62

Pound/dollar: DOWN at $1.2301 from $1.2442

Euro/pound: UP at 88.27 pence from 87.30

burs-jmb/cs

Agence France-Presse

Stocks close weaker as traders turn to US markets

MANILA, Philippines — The stock market closed the week on a sour note behind recent developments in the US political landscape.

The Philippine Stock Exchange index fell 0.97 percent or 77.26 points to finish at 7,819.22 on Friday.

The broader All Shares index likewise lost 0.85 percent or 40.53 points to settle at 4,728.81.

“Shares slid as traders monitored the latest trade developments and assessed a whistle-blower complaint against President Donald Trump that was released,” said Regina Capital’s Luis Limlingan.

Limlingan said positive statement on China-US trade talk, however, was able to limit losses in the overnight markets.

Local counters were covered in red, with mining and oil being the biggest casualty with a 2.62 percent or 241-point drop. Holding and property counters fell by more than one percent each.

Net foreign selling amounted to P464 million.

Market breadth was negative as decliners pummeled advancers, 133 to 57, while 43 stocks did not change. Value turnover stood at P5.93 billion.

“While we remain a buy on the index, we’ve been flagging the past few days that we would prefer to wait near its recent lows at the 7,620 level. With a lack of catalysts in the local scene in the near-term, movement could likely be dictated by US market movement and foreign flows,” Gabriel Perez of Papa Securities said.

source: philstar.com

Market may climb anew this week

MANILA, Philippines — The stock market may continue to go up this week, sustaining the gains the previous weeks amid the scheduled resumption of US-China trade talks, traders said.

Michael Ricafort, chief economist at Yuchengco-owned Rizal Commercial Banking Corp. (RCBC), sees the index’s next resistance at the 8,000 mark.

“The Philippine Stock Exchange Composite index (PSEi) gained for the third week in four weeks by 58.85 points or 0.7 percent to close at 7,992.32, a new one-month high and also among four-month highs and also among 17-month highs,” Ricafort said.


This, he said, is amid improved global risk appetite recently with the scheduled resumption of the trade talks between the US and China by early October and recent gestures by both countries to improve the said trade talks.

“The next resistance is at 8,000, which is a gateway prior to further upside potential in the near future,” Ricafort said.


Earlier, US President Trump deferred by two weeks the scheduled higher tariffs (which would translate to additional five percent duties) on $250 billion US imports from China. Trump deferred this to Oct. 15 from Oct. 1 to improve the US-China trade talks.

Ricafort said this was a positive signal for the global financial markets.

China also agreed to exempt some US imports from tariffs for about a year starting Sept. 17, which Ricafort said was another positive signal for the markets.

“Trump administration plans to ease sanctions on Iran to help secure a meeting with Iranian leader Hassan Rouhani on the sidelines of the UN General Assembly in New York on Sept. 23. The markets are also anticipating the upcoming Fed rate-setting meeting on Sept. 18 amid possible 0.25 rate cut, which is another factor that could support sentiment in the global financial markets in the coming week,” Ricafort said.

source: philstar.com

Asian equities mostly up after US, China tariff moves

HONG KONG, China — Asian investors on Thursday cheered Donald Trump's decision to delay a hike in tariffs on Chinese goods and Beijing's announcement that it would remove a range of US products from its own planned levies.

The moves signal an easing of tensions between the two economic superpowers ahead of a much-anticipated meeting of top-level negotiators next month.

They also provided an extra shot in the arm for investors as they await key announcements from the US and European central banks that are expected to see a further easing of monetary policy.


In a tweet on Wednesday night, Trump said: "We have agreed, as a gesture of good will, to move the increased Tariffs on 250 Billion Dollars worth of goods (25% to 30%), from October 1st to October 15th."

He added that the delay was requested by "Vice Premier of China, Liu He, and due to the fact that the People's Republic of China will be celebrating their 70th Anniversary", on October 1.

Earlier in the day, China said it would temporarily exempt 16 categories of US exports from tariff increases in an olive branch to Washington before the talks take place and which Trump described as "a big move".

The more conciliatory tone from both sides -- after months of rancour -- fuelled hopes they can edge towards a solution to their long-running trade war, which has jolted the global economy and stock markets.

The delay "shows Trump doesn't want to increase tariffs before the trade talks in early October and it creates good conditions", said Tommy Xie, an economist at Oversea-Chinese Banking Corp. "It adds to the hope that there'll be good news from the October meeting, and markets will wait and see."

Wednesday's developments were broadly welcomed though Asian markets struggled to hold on to initial rallies owing to profit-taking from a healthy run-up this week.

Central banks in focus

Tokyo ended the morning 0.8 percent higher and Shanghai added 0.2 percent while Sydney climbed 0.5 percent. Wellington and Taipei also rose, as did Jakarta, but Hong Kong dipped 0.2 percent.

Jun Inoue, a senior economist at Mizuho Research Institute, said Trump's move indicates he "can be flexible to get concessions from China and that he’s not trying to punish Beijing at any cost".

The apparent easing of trade tensions boosted oil prices as the prospect of an end to the row revived hopes for demand.

However, the gains followed a sharp drop for both main contracts as traders bet on a possible return of Iranian crude to the market after the firing of Trump's hawkish national security adviser John Bolton eased fears of a conflagration in the Middle East.

Traders are now turning their attention to Frankfurt, where the European Central Bank is expected to unveil economy-boosting stimulus. While the exact measures are unknown observers say it could cut interest rates deeper into negative territory or a new mass bond-buying drive, among other things.

Then, next week the Federal Reserve meets, with speculation rife that it will lower borrowing costs again, which would please Trump, who in a Twitter outburst on Wednesday said they should "BE BROUGHT WAY DOWN".

In share trading, Hong Kong Exchanges and Clearing sank more than three percent after its shock bid of almost US$40 billion for the London Stock Exchange Group on Wednesday.

Reports said the proposal is likely to fail, however, as it is dependent on the LSEG scrapping a planned $27 billion takeover of US financial data provider Refinitiv, which the three-centuries-old exchange said it "remains committed" to buying.

There are also concerns about ongoing unrest in Hong Kong and the influence of China in the group, the Financial Times reported.

source: philstar.com

Index ends lower on weak GDP growth, US-China trade woes

MANILA, Philippines — The index ended the week in negative zone, finishing 13.42 points lower at 7,742.20.

Likewise, the broader All Shares gauge was down 16.59 points or 0.34 percent to end at 4,791.26.

Majority of the indices were down as well except for the financials and industrial gauges which ended in positive territory.

Total value turnover reached P7.551 billion. Market breadth was negative, 101 to 78 while 64 issues were unchanged.

Traders said the market is still digesting the lower-than-expected first quarter economic growth of 5.6 percent as well as the lack of resolution on the brewing US-China trade war.


Some specific issues, however, bucked the trend such as Holcim Philippines whose shares reached a new high of P15.30 or up 6.10 percent.

This after San Miguel Corp., Holcim Philippines and Lafarge Holcim confirmed the acquisition by San Miguel of Holcim Philippines.

Lafarge Holcim, Europe’s biggest cement maker, sold its 85.7 percent stake in the company.

Lafarge Holcim CEO Jan Jenish said the sale of the company’s stake in Holcim Philippines now completes the cement giant’s exit from Southeast Asia.

“With the divestment of our activities in the Philippines, we are completing our exit from the increasingly hyper competitive arena in South East Asia. While this decision is based on our strategic portfolio review, we have reached very attractive valuations allowing us to achieve a new level of financial strength,” Jenish said.

On the other hand, SMC’s shares dropped 2.81 percent.

source: philstar.com

Psei down in morning trade as investors digest Luzon quake aftermath

MANILA, Philippines — Philippine shares were in the red at the end of the morning trade Tuesday as investors digest the aftermath of a magnitude 6.1 earthquake that struck Luzon on Monday.

As of market recess Tuesday, the bellwether Philippine Stock Exchange index was down 0.72% or 55.97 points to 7,776.46. The broader All Shares index was also in the negative territory, down 0.41% or 19.75 points to 4,814.93.

“Investors may remain on the sidelines as they gather more information regarding the aftermath of last night's earthquake. If there's any indication, Philippine iShares were slightly down -0.61% to 34.46,” Luis Limlingan of Regina Capital said in a market commentary.


Authorities say that as of mid-morning on Monday, 11 people have been confirmed dead in the aftermath of the earthquake.

The quake — which was tectonic in origin — hit Castillejos, Zambales at around 5:11 p.m. Monday. The Philippine Institute of Volcanology and Seismology earlier recorded a magnitude 5.7 quake before revising it to magnitude 6.1.

A total of 447 aftershocks were recorded as of 10 a.m. Tuesday following the tremor that hit Luzon and swayed buildings in Metro Manila.

‘Cautious’

Stocks were generally lower in Asian trade on Tuesday as investors move cautiously ahead of a deluge of corporate results later in the week.

Tokyo stocks were trading down with profit-taking before 10 days of holidays in Japan weighing on the market.

With many markets opening after an extended Easter break, Hong Kong Shanghai, Taiwan, Singapore were all down, while Australia and Seoul were trading up.

"Some of the world's biggest technology companies are reporting earnings this week as well as a raft of the big European banks," Nick Twidale, chief operating officer at Rakuten Securities Australia, said in a note to clients.

"Investors will be hoping for some better-than-expected results from both groups to keep the topside momentum in global equities, however if the data starts to show a significant slowing across these key industries then expect both stocks and risk trades to start to come under some heavy pressure."

Major earnings releases expected this week include Amazon, Facebook, Microsoft, Exxon Mobil and auto maker Tesla.

Aerospace giant Boeing will report earnings on Wednesday for the first time since a deadly March 10 plane crash plunged the company into crisis-mode. — Ian Nicolas Cigaral with AFP

source: philstar.com

Market may trade sideways this week

MANILA, Philippines — The stock market this week may be characterised by follow through buying on Chinese New Year ahead of the release of the January inflation numbers, according to First Metro Investment Corp. vice president Cristina Ulang.

Ulang said investors would closely monitor the corporate earnings report, noting that outperformance versus estimates would hold the key to sustained foreign buying.

Christopher Mangun, head of Eagle Equities, said that there may be lower trading volumes this week.


“This week is the first trading week of February and with only four days of trading we are going to see lower trading volumes as the holiday is in the middle of week and investors may take a break from trading and take the week off,” he said

Thus, he said the market may continue to trade sideways between 8,000 and 8,200.

“The index may end the week lower, but the key is for it to stay above the 8,000 level. If we continue to see heavy foreign inflows, then the market may sustain its current momentum. Local investors have started taking some risk off the table and currently foreign money is supporting the market. With earnings reports set to start coming in this week on top of better inflation numbers for January, we may see the market factor this is and maintain its current trajectory,” he said.

Last week, the market was pulled up by rosy western equities markets which rose after dovish comments from the US Fed.

The main index ended the week 90.96 points higher or 1.13 percent to close at 8,144.16.

In the first three days of trading, there was a pullback, even touching the 7,900 support level.

However, in the last two trading days there was already  a complete reversal, eventually breaking above 8,100 in the afternoon trading session on Friday, Mangun said.

Foreign money flooded the market with net foreign buying at P5.74 billion.

In all, the PSEi ends the month of January 7.3 percent higher which is the market’s best performance since March 2016.

source: philstar.com

Asian markets surge as Trump fuels China trade deal hopes

HONG KONG — Asian markets enjoyed another rally on Friday after Donald Trump hailed positive talks with Chinese President Xi Jinping and a report said he had asked officials to draw up a draft bill as he eyes a potential trade deal between the two.

Hong Kong jumped almost four percent in the afternoon, while Shanghai and the yuan soared as dealers seized on the news, hoping for a breakthrough in a standoff that has rocked global equities and fuelled warnings about global growth.

The gains follow a third straight advance on Wall Street as a sense of optimism returns after a diabolical October, with riskier, higher-yielding currencies enjoying a bounce against the dollar, and the pound holding on to most gains.


The day had already started with a bang after Trump tweeted that he had held positive talks with Xi, which was a rare sign of hope in the months-long stand-off between the world's top two economies.

"Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on Trade," he wrote.


He added that trade talks were "moving along nicely" and meetings were "being scheduled" at the G20 summit in Buenos Aires at the end of the month.

The comment comes days after Trump warned he would impose tariffs on all China's shipments to the US before saying he thought he could "make a great deal with China" but it was not yet ready.

Later, Bloomberg News, citing unnamed sources, reported that the president has requested key cabinet secretaries put together an outline deal to call a ceasefire in the painful row. It said several agencies had been called in to help with putting the plan together.

Hong Kong and Shanghai were already buoyant after Beijing said it would introduce measures to kickstart the stuttering economy following a string of weak data, including growth at its slowest pace in nine years during the third quarter.

The yuan also rallied to 6.9080 to the dollar, having hit 6.9302 earlier in the morning and is well off the 10-year lows around 6.97 on Thursday.

'Still cautious'

The optimism spread across the region. Tokyo was up 2.7 percent in the afternoon, Singapore 1.3 percent and Seoul piled on three percent, while Sydney reversed early losses to sit 0.1 percent higher.

Taipei, Bangkok, Mumbai and Jakarta also posted healthy gains.

"Positive comments from President Trump over US-China trade tension are cheering the market in the short term," said Tai Hui, chief market strategist for Asia Pacific at JP Morgan Asset Management.

"Dollar moderation, the stabilising trade relationship between US and China and more stimulus from Beijing will be the key ingredients to revive market confidence in Asia.

"While we are still cautious over a full resolution of recent tensions in the medium term, resumption of dialogue between Washington and Beijing would be good enough to investors for now."

Oil prices recovered after Thursday's plunge of more than two percent on oversupply worries, with US sanctions on Iran due within days but other major producers ready to pick up the slack.

The commodity has lost around 15 percent from four-year highs at the start of last month as Russia and OPEC said they would bolster output and dealers grew concerned about the impact on demand from a trade war between China and the US.

On currency markets high-yielding units were well bought. The Australian dollar climbed 1.1 percent, South Korea's won strengthened 1.5 percent and the South African rand was 1.6 percent higher.

India's rupee, which has been hammered this week by a standoff between the government and central bank, climbed almost one percent.

The pound dipped but held most of its gains after a report that British Prime Minister Theresa May had reached a post-Brexit deal with Brussels securing access to the EU for Britain's key finance sector.

Sterling jumped almost two percent on the report despite London and Brussels officials' reservations.

source: philstar.com

Asian stocks mixed as investors await US tariff hike

BEIJING — Asian stocks were mixed Tuesday after Wall Street's gains as investors waited for a new U.S. tariff hike in a trade battle with China.

KEEPING SCORE: The Shanghai Composite Index lost 0.3 percent to 2,661.33, while Tokyo's Nikkei 225 added 1 percent to 22,595.52. Hong Kong's Hang Seng retreated 0.3 percent to 26,538.58 and Sydney's S&P-ASX 200 advanced 0.5 percent to 6,171.00. Seoul's Kospi shed 0.3 percent to 2,281.90, while New Zealand. Benchmarks in Taiwan and Southeast Asia declined.

WALL STREET: U.S. stocks broke a four-day losing streak as industrial companies and retailers rose. Technology companies recovered some of last week's losses. Nike, Home Depot and Walmart all climbed. Microsoft and other technology companies rose, but Apple fell after saying more U.S. tariff hikes could push it to raise prices. The Standard & Poor's 500 index gained 0.2 percent to 2,877.13. The Dow Jones Industrial Average lost 0.2 percent to 25,857.07. The Nasdaq composite rose 0.3 percent to 7,924.16.



TRADE TENSIONS: The Trump administration is due to announce a decision shortly on whether to go ahead with 25 percent tariffs on $200 billion of Chinese imports in a dispute over Beijing's technology policy. The two sides already have raised duties on $50 billion of each other's goods. Trump said Friday that he was considering extending penalties to extending penalties to nearly all Chinese imports to the United States by raising duties on an additional $267 billion of goods.

ANALYST'S TAKE: "Wall Street balanced the tech gloom against the fresh focus on tax cuts on Monday yielding mixed returns," Jinyi Pan of IG said in a report. "The protracted expectation for more bad news to set in with the looming tariffs remains the most important factor weighing on markets currently."

ENERGY: Benchmark U.S. crude gained 4 cents to $67.58 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost 21 cents on Monday to close at $67.54. Brent crude, used to price international oils, advanced 11 cents to $77.48 in London. It rose 54 cents the previous session to $77.37.

CURRENCY: The dollar gained to 111.36 yen from Monday's 111.12 yen. The euro edged down to $1.1590 from $1.1595.

source: philstar.com

Asian stocks mixed as weak dollar weighs on US economic data

SINGAPORE — Asian markets were mixed Thursday as positive sentiment from U.S. economic data and the country's willingness to strike a trade deal with Canada was shaken by a weaker dollar.

KEEPING SCORE: Japan's benchmark Nikkei 225 added 0.2 percent to 22,883.64 and the Kospi in South Korea gained 0.3 percent to 2,316.35. Hong Kong's Hang Seng was 0.4 percent lower at 28,297.41. The Shanghai Composite index fell 0.6 percent to 2,752.13. Australia's S&P/ASX 200 rose 0.3 percent to 6,369.00.



WALL STREET: Gains by big technology companies and Amazon took U.S. indexes higher on Wednesday. Stocks have rallied for four days as investors grew more hopeful about trade talks between the U.S., Mexico and Canada. The S&P 500 index closed 0.6 percent higher at 2,914.04, a record high. The Dow Jones Industrial Average rose 0.2 percent to 26,124.57 and the Nasdaq composite jumped 1 percent to a record 8,109.69. The Russell 2000 index of smaller-company stocks climbed 0.4 percent to 1,734.75.

U.S ECONOMY GROWS: The U.S. economy grew at a strong 4.2 percent annual rate in the April-June quarter, the best showing in nearly four years, the Commerce Department said Wednesday. Strength in business investment offset slightly slower consumer spending, placing growth on track to produce the country's strongest full-year gain in more than a decade. Economists expect growth to slow to a still-solid 3 percent annual rate the rest of the year, resulting in full-year growth of 3 percent for 2018.

POSSIBLE TRADE DEAL: President Donald Trump has said that efforts to reach a deal with Canada in the new North American Free Trade Agreement were "probably on track". The longtime U.S. ally and the country's second-largest trading partner after China had been left out of talks for the past five weeks. Canada has until Friday to reach a deal. Canadian Prime Minister Justin Trudeau said there was a "possibility of getting to a good deal for Canada" by Trump's deadline but said the country will not sign a bad agreement. Mexico, long the target of Trump's ire, has cut a preliminary deal with the United States to replace NAFTA with a pact that's meant, among other things, to shift more manufacturing into the United States.


ANALYST'S TAKE: "The positive impulse seen in the U.S. market has not flown through to Asia. Weakness of the dollar has reversed sentiment in the markets overnight," Michael McCarthy, chief market strategist at CMC Markets in Sydney, said in an interview.

ENERGY: Oil prices have extended their gains on concerns that looming sanctions on Iran may cause supply to drop. Benchmark U.S. crude added 13 cents to $69.64 per barrel in electronic trading on the New York Mercantile Exchange. The contract edged 1.4 percent higher and closed Wednesday at $69.51. Brent crude, used to price international oils, gained 12 cents to $77.58 in London.

CURRENCIES: The dollar eased to 111.63 yen from 111.69 yen. The euro advanced to $1.1703 from $1.1699.

source: philstar.com

Dollar slips, yen strengthens on Trump’s Fed criticism

TOKYO – The dollar slipped against the yen and a basket of major peers on Tuesday after U.S. President Donald Trump said he was “not thrilled” with Federal Reserve Chairman Jerome Powell for raising interest rates.

The dollar was also soft as investors pulled out of the safe-haven currency ahead of anticipated talks this week between China and the United States, which some market participants believe might lead to an easing in trade disputes.

“At the moment, markets fear that Trump may have some impact on the Fed’s policy,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

“Especially the dollar/yen, which is sensitive to the rate moves of the United States, remains under pressure.”

The yen rose 0.18 percent to 109.87 yen as of 0050 GMT. The dollar on Tuesday fell below the psychologically-significant 110 yen level for the first time since June 28.

The dollar index against a basket of six other currencies fell 0.44 percent to 95.475 as of 0041 GMT after touching as low as 95.440, its lowest level since Aug. 9.

The greenback slipped after Trump said in a Reuters interview on Monday he was “not thrilled” with Powell’s raising of interest rates. Trump nominated Powell last year to replace former Fed Chair Janet Yellen.

The U.S. president spooked investors in July when he criticized the Fed over tightening monetary policy. On Monday he said the Fed should be more accommodating on interest rates.

Mizuho Securities’ Yamamoto said Fed officials don’t seem to be influenced by Trump’s comments.

“As long as the U.S. economy is okay…then I think there is no reason to stop the rate hikes from the Fed’s point of view,” he said.

Trump also said the U.S. central bank should do more to help him to boost the economy while he also accused China and Europe of manipulating their respective currencies.

Escalating trade tensions between the United States and its trading partners and a plunge in the Turkish lira had pushed the dollar index to 96.984 on Aug. 15, its highest since June 2017.

The dollar’s rally halted ahead of anticipated trade talks between Chinese and U.S. officials in Washington. Media reports have said the talks will take place in the next few days.

The euro, which had slipped to a 13-month low early last week amid concerns that the Turkish crisis could hurt European bank, gained on Tuesday. The single currency rose 0.37 percent to $1.1523 as of 0051 GMT.

The offshore Chinese yuan was 0.16 percent stronger at 6.8262 per dollar. The Australian dollar was 0.14 percent higher at $$0.7350.

source: interaksyon.com

Why markets are worried about suddenly cold Turkey

NEW YORK — Why are investors around the world so worried about Turkey's economy, when it's smaller than Florida's? Because of the possibility that somebody bigger will be next.

Investors have been pulling out of Turkey's markets, sending its stock market and currency plunging. That's making debt that Turkish companies owe in dollar terms even more expensive to pay back, which only further weakens the country's financial system.

Turkish companies need to pay close to 5.80 lira for each $1 of debt that they owe, for example, up from 3.79 lira at the start of the year.

The big fear, though, is that the distress could spill over into other emerging markets and cause a cascading wave of losses as investors pull out of other countries that borrow heavily in dollars and are dependent on foreign investors. Argentina? Brazil? South Africa?

Such a thing has happened before. A financial crisis that began in 1997 after Thailand devalued its currency eventually sent markets reeling across the region in what became known as the Asian financial crisis.

Stoking the concerns is the rising US dollar and a Federal Reserve that has pledged to continue raising short-term interest rates. Such moves have historically coincided with pain for emerging market stocks. When US rates are higher, investors feel less need to head to emerging markets in search of higher returns.

Many analysts along Wall Street, though, say they don't expect another Asian financial crisis. Turkey has borrowed much more in foreign currencies than any other country, as a percentage of its economy, and investors question how much authority its central bank has to raise interest rates.

Emerging-market economies broadly are also in much better shape than 20 years ago, with stronger currency reserves, say strategists at Wells Fargo Investment Institute.

"Turkey is both more exposed and less able to do something about it than any other country," says Brad McMillan, chief investment officer for Commonwealth Financial Network.

source: philstar.com

China loses spot as world's No.2 stock market: Bloomberg

SHANGHAI — China's stock market has been overtaken as the world's second-biggest by Japan's, having been swiped this year by the threat of a trade war with the United States and slowing economic growth.

Data from Bloomberg News in intra-day trade on Friday showed the value of equities on the mainland had slipped behind those in their neighbouring country for the first time since taking the number-two spot in 2014.

The figures showed Chinese stocks were worth $6.09 trillion, compared with $6.17 trillion in Japan. The US market is worth $31 trillion.

While global markets have been broadly hit by fears of a trade war between the world's top two economies, Chinese equities are among the worst performers this year, with the benchmark Shanghai Composite Index slumping more than 16 percent since the start of January.

The pressure was ratcheted up this week when the White House said it was considering more than doubling threatened tariffs on a range of Chinese imports worth $200 billion.


Washington has already imposed tariffs on $34 billion worth of goods and is considering hitting another $16 billion in the coming weeks.

"Losing the ranking to Japan is the damage caused by the trade war," Banny Lam, head of research at CEB International Investment in Hong Kong, told Bloomberg News.

"The Japan equity gauge is relatively more stable around the current level but China's market cap has slumped from its peak this year."

Adding to the selling has been a string of data indicating economic growth is slowing, while Beijing has embarked on a drive to cut a worryingly large debt mountain as well as reduce pollution.

Also worrying investors are the yuan's recent losses, with the currency at its lowest level against the dollar for more than a year, while traders have been mostly unmoved by government measures and promises to support the economy.

At the same time, Japanese corporate results have been broadly upbeat, providing some support to markets there, though the Nikkei is still slightly down this year.

"Investors are paying attention to government policies as the US-China trade war will remain uncertain for now," Yoshihiro Okumura, general manager at Chibagin Asset Management, told AFP in Tokyo.

"On the other hand, Japanese companies are showing strong results in general, sustaining share prices on the Tokyo Stock Exchange."

However, he added: "The Tokyo market is not in top form. The country is also subject to the trade war as it is heavily relying on global trade."

Chinese stocks have been on a rollercoaster since taking the second spot in 2014.

Fuelled by risky investing by individual investors looking for a quick profit, the market surged through early 2015 to hit a high of $10 trillion, but then the bubble burst and it went into a downward spiral, with the Shanghai composite crashing about 40 percent.

source: philstar.com