Global equities fall to a month low after US production shocks

admin October 2, 2019

10 3 minutes read

Global equities fall to a month low after US production shocks

By Hideyuki Sano

TOKYO (Reuters) – Global stocks fell to a month low on Wednesday after US manufacturing activity fell to more than ten years low, raising concerns that the fallout from the US-China trade war is spreading to the US economy.

A slowdown in US economic growth would remove one of the few remaining bright spots in the global economy and come just as Europe is seen as falling into a recession.

covering 49 markets, dipped 0.06% to a low last seen in early September, after shedding 0.83% in the previous session. " data-reactid = "25"> MSCI's Globe Globe <.MIWD00000PUS> covering 49 markets, dipped 0.06% to its lowest level in early September, after dropping 0.83% in the previous session.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "European shares are expected to drop, with European stock futures trading down 0.2% -0.4%. " data-reactid = "26"> European equities are expected to fall, with European equities futures trading down 0.2% -0.4%.

dropped 0.6%, with Australian shares <.AXJO> falling 1.3% and South Korean shares shedding 1.5%. Japan's Nikkei <.N225> slid 0.4%. China markets are closed for a one-week holiday. " data-reactid = "27"> In Asia, MSCI's ex-Japan Asia-Pacific stock index <.MIAPJ0000PUS> fell 0.6%, with Australian stocks <.AXJO> falling 1.3% and South Korean stocks dropping 1.5%. Japan's Nikkei <.N225> slipped 0.4%. The China markets are closed for a week's holiday.

was down 0.3% after a market holiday the previous day.The index fell as much as 1.2% in early trade.On Tuesday, Hong Kong police shot a teenage protester, the first to be hit by live ammunition in almost four months of unrest in the Chinese-ruled city. " data-reactid = "28"> Hong Kong's Hang Seng Index <.HSI> was down 0.3% after a market break the day before. The index fell as much as 1.2% in early trading. On Tuesday, Hong Kong police shot a teenage protester, the first to be hit by live ammunition in nearly four months of turmoil in the Chinese-controlled city.

Retail sales data in Hong Kong September is due later Wednesday. [19659010] "Nothing but a terrible number can be imagined here," said ING chief of Asia-Pacific economist Rob Carnell in a note, adding that he looked at Hong Kong events "with a growing sense of despair."

Asia, North Korea conducted at least one projectile launch on Wednesday, a day after it announced that they will hold on-the-job talks with the United States this weekend.

lost 1.23% to hit four-week lows. " data-reactid = "32"> On Wall Street, the S&P 500 <.SPX> lost 1.23% to hit a four-week low.

Sales were triggered after the Institute for Supply Management (ISM) Factory Activity Index, one of the most monitored data on US industry, fell 1.3 points to 47.8, the lowest level since June 2009.

reading below 50 indicates co concentration in the industry. Markets had expected the index to rise above 50.

(GRAPHS: US Production – https://fingfx.thomsonreuters.com/gfx/mkt/12/6830/6761/191002i.png) Data 19659016/11 The data came after that production data in the euro area showed the sharpest contraction in almost seven years.

"In terms of the outlook for the industry, US-China trade talks were scheduled for next week everything. If all goes well, we could well see a V-shaped recovery in ISM data in the coming months," said Hirokazu Kabeya, chief for global strategist in Daiwa Securities.

"That means we can't just bet on a further downturn in the US economy now. On the whole, I don't think we have to change the view that the US economy remains relatively solid," he added to.

<p class = "canvas atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The poor data lifted the Fed funds rate futures price sharply, with the November contract now pricing in about an 80% chance the US Federal Reserve will cut interest rates on Oct. 30, compared to just over 50% before the data. " data-reactid = "41"> The bad data lifted the Fed funds sharply for the future, with the November contract now priced at about an 80% chance the US central bank would cut interest rates on October 30, compared to just over 50% ahead of the data. [19659020] US-. President Donald Trump once again buzzed on the Federal Reserve on Tuesday, saying that the central bank has kept rates "too high" and that a strong dollar is hurting US factories.

However, there is another question of whether the Fed will cut interest rates as quickly as Trump, and financial markets will.

"We do not think the Fed will cut interest rates this month. The Fed is likely to want to cut interest rates in December, looking at the strength of the economy around the time when new tariffs on China will settle," said Toshifumi Umezawa, Pictet strategist Asset Management.

"Given the opinion of Fed makers, it will be difficult to come to a conclusion by this month," he added.

Just on Tuesday, Chicago Fed President Charles Evans said the Fed could keep rates for now, and there is room to raise rates a little over the next few years if the economy continues to grow.

In the foreign exchange market, the US dollar slipped from Tuesday's two-year high against a basket of currencies as the ISM survey shook the notion that the US economy would withstand the trade war.

The yen rose to 107.85 yen per dollar from Tuesday's low of 108.47.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The euro stood at $ 1.0933 having bounced off a near 2 1/2-year low of $ 1.0879 hit on Tuesday. " data-reactid = "49"> Euro stood at $ 1.0933 after bouncing off a near 2 1/2 year low of $ 1.0879 hit on Tuesday.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The Australian dollar fetched $ 0.6713 having hit a 10 1/2-year low of $ 0.6672 the previous day after the Reserve Bank of Australia cut interest rates and expressed concern about job growth. " data-reactid = "54"> The Australian dollar fetched $ 0.6713 after hitting a 10 1/2 year low of $ 0.6672 the day before after the Reserve Bank of Australia cut interest rates and expressed concern about job growth.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Gold rose to $ 1,479.80 per ounce from a two-month low of $ 1,459.50 hit Tuesday on the back of a robust US dollar. " data-reactid = "55"> Gold rose to $ 1,479.80 per ounce from a two-month low of $ 1,459.50 hit Tuesday on the back of a robust US dollar.

Weak US data pushed oil prices to near a month's lowest price, although a surprise fall in US commodity stocks helped them recoil in Asia.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Brent crude futures rose 0.9% to $ 59.42 a barrel, after hitting a four-week low of $ 58.41 on Tuesday, while the US West Texas Intermediate (WTI) crude gained 1.4% to $ 54.36 per barrel after hitting a one-month low of $ 53.05. " data-reactid = "57"> Brent crude futures rose 0.9% to $ 59.42 a barrel, after hitting a four-week low of $ 58.41 on Tuesday, while the US West Texas Intermediate (WTI ) Crude Oil reached 1.4% to $ 54.36 per barrel after hitting a month low of $ 53.05.

(Reporting by Hideyuki Sano; Additional Reporting by Noah Sin in Hong Kong, Editing by Richard Borsuk and Richard Pullin)

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