Asian Stocks Slip, Taking Early Cues from Lower Wall Street
Respite in Asian markets proves short-lived as Asian markets slide back into negative territory this morning.
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Asian stocks fell on Thursday after US stocks retreated overnight and as Japan machinery orders unexpectedly shrank, deflating investors’ appetite for riskier assets.
Tokyo’s Nikkei fell 3%, after jumping 7.7% the day before amid hopes for fresh government stimulus.
Japan’s key gauge of capital spending unexpectedly fell for a second straight month in July, signalling that the economy is struggling to get back on track after contracting in the second quarter.
Investors are awaiting China inflation data later in the session for further clues on the health of its economy.
US stocks rose early on Wednesday on hopes of more stimulus measures in China but retreated later in the session amid declines in shares of Apple and energy stocks, which were dragged down by plunging oil prices. The S&P 500 ended down 1.5% and futures slipped another down 0.3% in the Asian day.
Speculation about fiscal policy support from China and Japan failed to sustain the rally in risky assets. Although volatility has decreased in the past few days, uncertainty about the global economic slowdown, potential outflows in troubled emerging markets, and the policy response from major central banks is here to stay for the foreseeable future.
— Barclays
Elsewhere, Standard & Poor’s stripped Brazil of its investment-grade credit rating on Wednesday, further hampering President Dilma Rousseff’s efforts to regain market trust and pull Latin America’s largest economy out of recession.