Asian stocks fell on Wednesday, November 21, 2018, as worries about the global economy deepened and rippled through Wall Street, oil markets and major currencies.
MSCI’s broad Asia-Pacific index outside Japan slipped 0.6 percent, with the Shanghai Composite down 0.2 percent after moving between gains and losses. Australia’s market lost 0.6 percent, South Korea’s KOSPI dropped 0.85 percent and Japan’s Nikkei eased 0.7 percent.
The selloff followed a weak session in the United States on Tuesday, when energy shares fell alongside crude prices and retailers such as Target and Kohl’s sank after disappointing earnings and outlooks. The Nasdaq finished at its lowest level in more than seven months, while the S&P 500 and Dow closed at their weakest since late October.
Soichiro Monji, senior economist at Daiwa SB Investments, said it was hard to isolate one trigger for the risk-off mood. “It is difficult to pinpoint a single factor driving the global risk aversion. Apple and trade tensions seem to be touted as factors every other day, but it is difficult to blame them for all the woes,” he said.
He added that markets were beginning to price in slower momentum in the world economy even though current conditions remained solid. Capital Economics also pointed to weakness in China and a possible sharp slowdown in the United States next year, warning that information technology earnings could be hit hard because of the sector’s cyclical nature.
Currency markets were steadier, but the dollar held firm after rebounding overnight. The dollar index was little changed at 96.838 after rising 0.7 percent, having earlier fallen to a two-week low of 96.042. The euro was flat at $1.1369, while the dollar gained 0.25 percent to 112.92 yen.
The Australian dollar edged up 0.2 percent to $0.7229 after a 1 percent drop the previous day. The Canadian dollar remained near a five-month low of C$1.3318 per dollar after losing more than 1 percent on Tuesday, reflecting pressure on commodity-linked currencies as crude prices weakened.
Oil prices recovered slightly after Tuesday’s sharp fall, but the market remained unsettled. The International Energy Agency warned of unprecedented uncertainty in oil markets because of the economic backdrop and political risk.
U.S. crude futures rose 1.2 percent to $54.08 a barrel after sliding about 6 percent on Tuesday to $52.77, their lowest since late October 2017. Brent crude also gained 1.2 percent to $63.28 a barrel after dropping more than 6 percent the previous day to $61.71, a near one-year low. At the start of October, Brent had traded above $86.00 a barrel.
Reporting by Shinichi Saoshiro; Editing by Eric Meijer and Sam Holmes.
