Asian stocks fell Thursday in the wake of steep losses on Wall Street, as Brent crude oil skidded to 12-year lows amid a commodities rout that heightened fears about the global economy.
European markets were expected to open sharply lower. Financial spreadbetters predicted Britain’s FTSE 100 .FTSE and Germany’s DAX .GDAXI to each open down by as much as 1.7 percent, and France’s CAC 40 .FCHI to open as much as 1.8 percent lower.
“A lot of recent data has emphasized that the bottom has not quite fallen out of the global economy, but a negative feedback loop of self-perpetuating fear seems to have gripped global markets,” Angus Nicholson, market analyst at IG in Melbourne, wrote in a note.
Global benchmark Brent LCOc1 was off lows but still down 0.3 percent at $30.22, after marking a fresh 12-year low of $29.73.
U.S. crude prices CLc1 added about 1 percent to $30.77 a barrel, but remained not far from Tuesday’s nadir of $29.93, which was their lowest level since December 2003.
“Perhaps $30 or just slightly below is acting as a little bit of a floor, but that being said that’s a straw in a hay barn in terms of positivity,” said Ben le Brun, market analyst at OptionsXpress in Sydney.
“The rest of the news is decidedly negative about oil,” he said.
London copper fell to its lowest since May 2009, compounding worries about the effect of China’s waning growth on demand for commodities. Copper CMCU3 was last down nearly flat at $4,392.50 a tonne after earlier dropping as low as $4,330.
Adding to the risk-off sentiment, a gun and bomb attack rocked Jakarta, which helped send the rupiah down around 1 percent against the dollar at one point to as low as 13,960 IDR=ID. Indonesia’s benchmark stock index .JKSE was down 1.7 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 1.4 percent.
China’s recently volatile main stock indexes reversed earlier losses, with the Shanghai Composite Index .SSEC trading up 0.9 percent and the CSI300 index .CSI300 up 1.1 percent.
South Korea’s KOSPI .KS11 slipped 0.9 percent, after the country’s central bank kept interest rates unchanged for a seventh straight month as expected. The Bank of Korea said it would monitor recent market turmoil sparked by developments in China as well as the effects of the U.S. Federal Reserve’s December rate hike.
Japan’s Nikkei .N225 ended off lows but still shed 2.7 percent, as downbeat domestic data added to the gloom. The yield on the benchmark 10-year Japanese government bond JP10YTN=JBTC touched a fresh record low of 0.190 percent.
Japan’s core machinery orders fell 14.4 percent in November from the previous month, down for the first time in three months and marking a bigger decline than economists’ median estimate for a 7.9 percent drop.
“Investors are increasingly worried that the (U.S.) market is not strong enough to withstand an initial view that the Fed would hike rates four times this year,” said Masashi Oda, senior investment officer at Sumitomo Mitsui Trust Bank.
Boston Fed President Eric Rosengren sounded a cautious tone overnight, saying global and U.S. economic growth may be slipping and could force the Fed into a more gradual course of rate hikes than officials currently expect.
On Wednesday, better-than-expected China trade data lifted Asian sentiment and gave equities and commodities prices a much-needed boost. But those gains unraveled later in the global session, and major U.S. stock indexes finished with sharp losses.
The benchmark 10-year U.S. Treasury yield US10YT=RR plumbed its lowest levels since late October as investors sought safety in government debt. It stood at 2.082 percent in Asian trade, compared with its U.S. close of 2.066 percent on Wednesday.
Undermined by lower U.S. yields, the dollar lost ground to its perceived safe-haven Japanese counterpart, though it clawed some of it back by the end of the Asian session. It was buying 117.71 JPY=, down about 0.1 percent. The euro was nearly flat at $1.0873 EUR=.
Sterling was steady at $1.4404 GBP= ahead of the Bank of England’s policy meeting later in the session that is expected to signal a delay in hiking interest rates.
Market participants continued to keep an eye on China’s yuan, which weakened even after the People’s Bank of China set its midpoint rate CNY=SAEC at 6.5616 per dollar prior to market open, firmer than the previous fix of 6.563.
The PBOC has held the line on its currency in the past few days, calming some fears of a sustained depreciation.