Asia Stocks Hobbled By Growth Anxiety, China PMI Fails To Impress

Big 5

Asian shares sagged on Thursday after a retreat on Wall Street and falling crude oil prices rekindled investor anxiety over slowing global growth, while a mixed picture on Chinese manufacturing failed to impress markets.

Japan’s Nikkei share average fell 0.4 percent while MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.3 percent.

European shares look set to slide, with spreadbetters expecting France’s CAC 40 to fall as much as 0.8 percent, Germany’s DAX 0.7 percent and Britain’s 0.6 percent.

Turbulence has gripped global markets in recent weeks on anxiety about slowing world growth. In particular, investors have been rattled by the threat of recession in Europe and the Chinese economy cooling to its weakest in over five years in the third quarter.

The latest manufacturing read on China did little to allay those concerns.

The flash HSBC/Markit manufacturing purchasing managers’ index (PMI) edged up to 50.4 from a final reading of 50.2 in September, just a hair’s breadth from the 50.3 reading forecast by analysts.

But the level of output in factories fell to a five-month low of 50.7, just above the 50-point level that separates growth from contraction on a monthly basis, pointing to a still-shaky economy.

“While the manufacturing sector likely stabilized in October, the economy continues to show signs of insufficient effective demand,” said Hongbin Qu, chief economist for China at HSBC.

Falling oil prices also lent an air of caution and underscored worries over the health of the global economy.

“I think it will take some time before markets calm down. Market sentiment is still fragile. The market has realized that the U.S. economy cannot be decoupled from sluggishness in the rest of the world,” said Tsuyoshi Shimizu, chief strategist at Mizuho Asset Management.

“But on the other hand, I think the market is now going to the other extreme in betting on recoupling of the U.S. and the rest of the world,” he added.

Wall Street shares slid on Wednesday after big gains in the past few days, with S&P 500 Index falling 0.7 percent.

Energy companies were hit by a fall in oil prices while earning results from companies such as Boeing and Biogen Idec failed to meet investors’ lofty expectations.

In addition, a shooting incident at the Canadian parliament in Ottawa unnerved investors.

Oil prices flirted near multi-year lows hit last week, after data showed a second consecutive weekly jump in U.S. crude stockpiles.

The U.S. Energy Information Administration said crude stocks rose by 7.11 million barrels, more than double the 2.7 million barrel increase analysts had expected. [EIA/S]

U.S. crude futures last traded at $80.50 per barrel, after a 2.8 percent fall on Wednesday to trade near two-year low of $79.78 hit last week. Brent crude slipped to $84.65, not far off a four-year low of $82.60 plumbed a week ago.

The focus now turns to string of manufacturing reports from Europe due later in the day, which will give investors another chance to gauge the pulse of the world economy.

In the United States, a mild rebound in U.S. consumer prices in September reduced some bets the Fed might postpone possible plans to raise rates in 2015, keeping U.S. Treasuries in check.

The 10-year U.S. Treasuries yielded 2.208 percent, having risen as high as 2.250 percent on Wednesday.

The data also helped to lift the U.S. dollar against other currencies. The euro dipped to $1.2674, near its lowest level in more than a week, having slipped from $1.28875 marked on Wednesday last week.

The euro was not helped by anxiety that some European banks may fail stress tests by the European Central Bank, the outcome of which is due on Sunday. Spanish news agency EFE, citing unnamed financial sources, said 11 banks were set to fail.

The dollar also ticked up to 107.18 yen, up about a full yen from Tuesday’s low of 106.15.

Elsewhere, the New Zealand dollar tumbled 1.0 percent to $0.78749 following data showing consumer price inflation in New Zealand slowed in the third quarter.

Source : Reuters