Asia shares tumble when Hong Kong turmoil, Argentine peso crashes unnerve investors
TOKYO (Reuters) – Asian stocks plunged on Tuesday as fears of a drawn Sino-US trade war, protests in Hong Kong and a crackdown in Argentina's peso currency drove investors to safe havens such as bonds, gold and the Japanese yen.
FILE PHOTO: Men pass in front of an electric screen showing Japan's Nikkei stock average outside a brokerage house in Tokyo, Japan, August 5, 2019. REUTERS / Issei Kato
MSCI's broadest index of Asia-Pacific stocks outside Japan drove 1%. Chinese stocks fell 0.8%, while Hong Kong's most important market index fell more than 1% to a seven-month low.
"The protests in Hong Kong are negative for equities, which were already in an adjustment phase because there is talk that the trade war will trigger a recession," said Kiyoshi Ishigane, chief executive of Mitsubishi UFJ Kokusai Asset Management Co.
Hong Kong Airport, the world's busiest airport, reopened on Tuesday, which may ease some concerns about the immediate economic impact of protests over the past two months.
The protests began in opposition to a bill allowing expansions to mainland China, but have quickly become the biggest challenge for China's authority over the city since it withdrew Hong Kong from the United Kingdom in 1997.
Japanese Nikkei was also hit hard , down a whopping 1.5% and on course for its biggest daily decline in a week.
U.S. stock futures were 0.13% higher in Asia, but did little to ease the mood.
Shares in Singapore plunged 1.1% to reach their lowest since June 6 after the government lowered its full-year economic growth forecasts. The city state is often regarded as a watch for global growth because of its importance as a central trade hub.
Sales in regional markets came when Wall Street shares struck on Monday, and the S&P 500 lost 1.23%.
The sentiment was already weak due to growing signs that the US and China will not quickly resolve their years-long trade war. Markets were hit with further turbulence after protesters managed to close Hong Kong airport on Monday.
Traders were also at the forefront after the market-friendly Argentine President Mauricio Macri suffered an abuse in the presidential election, increasing the risk of a return to interventionist economic policy.
Benchmark 10-year government bonds were near the lowest in almost three years, gold was pegged near six-year highs, and the yen was within a seven-month high against the dollar against a surge in financial markets already is affected by global growth relations.
“Long-term interest rates will continue to fall and stocks will adjust lower, but this is temporary. Large central banks are cutting interest rates, which will ultimately provide financial support, ”said Ishigane, Mitsubishi UFJ.
Analysts said trading could be curbed as many investors are on summer vacation. Still, there was no shortage of gloomy news for investors who wanted to take their breath away from several months of market disruption.
The Argentine peso collapsed overnight, falling to $ 55.85, after voters snubbed Macri by giving the opposition a surprisingly larger-than-expected victory in Sunday's primary election.
The Merval stock index <.MERV > crashed by 30% and the declines of 18-20 cents in Argentina's 10-year bond reference index allowed them to trade at around 60 cents on the dollar or even lower.
Refinitive data showed that Argentine equities, bonds and the peso had not recorded this type of simultaneous fall since the South American country's economic crisis in 2001 and debt failure.
The bleak backdrop was enough to push investors into safe havens, and US government bonds fell across the board Monday as trade concerns and political tensions backed assets to a safe haven.
In Asia, benchmark 10-year government bonds fell to 1.6471% on Tuesday. On August 7, yields had risen to 1.5950%, the lowest since October 3, 2016.
Spot gold rose 0.33% to $ 1,516.42 per ounce, near the six-year high.
The Yen last fetched $ 105.37 per dollar, and was within striking distance of 105.03, the strongest since the January 3 crash.
The Swiss franc, which, together with the yen, is considered a safe haven in difficult times, traded at 0.9697 per dollar, near the highest in a year.
Oil prices fell slightly in Asian trade as expectations that large producers would continue to reduce supplies, worried about weak economic growth.
U.S .. Intermediate futures in West Texas fell 0.33% to $ 54.75 a barrel.
(Graphic: Asian Stock Markets links: tmsnrt.rs/2zpUAr4)
Editing Shri Navaratnam
