Asian shares tumbled to 20-month lows and S&P futures fell sharply at the end of a turbulent week for financial markets on Friday, as anxiety over the outlook for U.S. corporate profits added to lingering fears about global trade and economic growth.
The losses came despite a bounce on Wall Street overnight, highlighting fragile investor confidence, as shares of tech titans Amazon.com Inc and Alphabet Inc fell sharply after the closing bell on disappointing earnings.
In Friday’s Asian session, S&P E-mini futures slumped 0.66 percent, setting up a potentially rough session for U.S. markets which had crumbled on Wednesday on concerns about earnings and sent global equities into a tailspin.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1 percent, erasing tiny gains made in the opening hour and hitting its lowest level since February 2017. Not helping was a slide in the Chinese yuan past a key level, refocusing market attention on slowing growth in the world’s second-biggest economy.
“There’s no question that the weight of sentiment has been building,” said James McGlew, executive director of corporate stockbroking at Argonaut in Brisbane, highlighting in particular rising geopolitical tensions including Brexit, and “internal financial tension” in China.
“All of these things added up to the volatility hitting a boiling point… and I don’t’ think at the moment people should be trying to catch the falling knife,” he said.
The MSCI Asia index has been bruised by a heavy sell-off in the past several days, and is on course for its fifth weekly loss – its longest such streak since 2015. It has fallen more than 4 percent this week.
Chinese shares were pulled lower amid the generally dismal mood, and as the yuan fell past the psychologically important 6.96 level to the dollar, touching its lowest levels against the greenback since January 2017.
The blue-chip index was down 1 percent and the Shanghai Composite was 0.53 percent lower in early afternoon trade.
Chinese shares have been hit by volatility this week amid a string of official announcements and measures aimed at supporting the markets following a recent plunge. The heavy sell-off has raised concerns about risks posed by about $620 billion worth of shares pledged for loans.
In Hong Kong, the Hang Seng index was 1.05 percent lower, with tech shares dropping 2.72 percent.
Tech firms also fell in South Korea, where the broader market slid 1.62 percent, deepening losses after the Kospi closed at its lowest level since January 2017 on Thursday.
In Australia, shares turned down 0.4 percent after gaining modestly at the start. But Japan’s Nikkei stock index was shaken by a volatile session, spending much of the morning in the red and last trading flat after tumbling 3.7 percent on Thursday.
Financial markets have been whipsawed in recent sessions on concerns over global growth as investors fretted over Sino-U.S. trade frictions, a mixed bag of U.S. corporate earnings, Federal Reserve rate hikes and Italian budget woes. A slowdown in China has been particularly worrying for policy makers and investors, hitting asset markets from stocks to currencies and commodities.
Analysts at Capital Economics sounded a cautious note, suggesting that the bounce in the S&P 500 index on Thursday was only temporary as investors worries about the economic outlook worsen.
“The first, and most important (worry) is that Fed tightening and fading fiscal stimulus will cause the US economy to take a turn for the worse … The second is that China’s economy will continue to struggle,” the analysts said in a note to clients.
“As we have been arguing for a while now, these worries are likely to get worse over the next twelve months or so.”
Investors will get a chance to check the U.S. economic pulse later Friday when the government releases third-quarter GDP data.
ANZ analysts highlighted weak U.S. core durable goods data as suggesting that “investment is not taking off, even with the apparent tailwind from tax cuts and USD repatriation.”
“This indicates that the boost to GDP growth from the fiscal stimulus could be fairly transitory,” the analysts said.
DRAGHI COMMENTS HIT EURO
In currency markets, the euro fell, extending weakness after European Central Bank President Mario Draghi said the bank’s 2.6 trillion euro ($2.96 trillion) asset purchase program will end this year and interest rates could rise after next summer, despite fears about the monetary union’s economic and political future.
The single currency was 0.1 percent lower at $1.1362.
The dollar was off 0.21 percent against the yen at 112.16. The dollar index, which tracks the greenback against a basket of six major rivals, was 0.04 percent lower at 96.644.
U.S. Treasury yields rose as equity markets plunged. The 10-year yield fell to 3.1056 percent compared with its U.S. close of 3.136 percent on Thursday.
Oil prices gave up ground, heading for their third weekly loss after earlier rising on signals from Saudi Arabia’s energy minister that there could be a need for intervention to reduce oil stockpiles.
U.S. crude dipped 0.85 percent to $66.76 a barrel. Brent crude fell 0.62 percent to $76.41 per barrel.
Spot gold ticked up to $1,231.92 per ounce.
Nigeria Remains Third Most Terrorized Country In The World
Nigeria still holds the unenviable position as the third most terrorized country in the world.
The 2018 global terrorism index, released on Wednesday, says this is as a result of the spate of terrorism in Nigeria. It also points to what it called the “increase in violence involving Fulani extremists”. The report says this is happening as deaths committed by Boko Haram are falling..
Nigeria is ranked only below Iraq and Afghanistan, both in first and second positions.
This year alone, hundreds of Nigerians have been killed in attacks by suspected herdsmen as well as clashes between the herders and farmers/communities.
States worst hit in the attacks are Plateau, Benue, Zamfara, Taraba and others.
The report also noted that, compared to the peak of “terrorist deaths” in 2014, “the largest falls in the number of deaths occurred in Iraq, Nigeria, and Pakistan.
Migrants Breech U.S.-Mexico Border
Central American migrants stuck at the U.S.–Mexico border breached the border fence on Monday, even though they knew they could be detained by U.S. authorities. They hoped the illegal entry would allow them to apply for asylum.
Since mid-October, thousands of Central Americans, mostly from Honduras, have traveled north through Mexico in a caravan, some walking much of the long distance.
U.S. President Donald Trump has vowed to stop the migrants, sending troops to reinforce the border and attempting a procedural change to require asylum-seekers to remain in mexico while their cases are heard. So far, the courts have denied those attempts.
Applying for asylum at a U.S. land border can take months, so if migrants enter illegally and present themselves to authorities,their cases could be heard more quickly.
Analyst Expects Unsuccessful Yemen Peace Meeting
A political analyst says prospects for returning to a unified Yemen remain dim despite members from both warring parties meeting to discuss peace in Stockholm, Sweden.
Supported by the United Nations, representatives of the Yemeni government and the Houthi rebels will meet for political consultations later this week, although no exact date has been announced for the start of the negotiations that would be the first peace talks since 2016.
Mokhtar Yafie, a political analyst in Aden says he does not expect much success from the Stockholm peace meeting.
Yafie added that the internal divisions within the Yemeni government and the Houthi would also complicate the negotiation.
Although some residents in Yemen hold little hopes for the peace talks, there are people having high expectations for them.
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