Global Weakness
- Asian stocks on the back foot
- Overnight US markets fell almost 3%
- Weak US manufacturing survey follows downbeat China figures
- Dollar steadies after making sharp losses
- Crude oil tumbles 8% on demand concerns
Asian shares got off on the back foot on Wednesday after weak manufacturing activity reports from both the US and China sent Wall Street reeling, while the dollar steadied after steep losses.
Data showing US factory activity hit a more than two-year low in August added to an already grim mood, coming on the heels of a survey showing China’s manufacturing sector shrank at its fastest pace in three years last month.
MSCI’s broadest index of Asia Pacific shares outside Japan was down 0.4% in early trade, while Japan’s Nikkei stock index shed 0.8%.
Investors were braced for volatile day in Chinese equities markets, the final trading day before a two-day holiday to commemorate the end of World War II.
The downturn in markets is based less on rising fears that China’s economy is slowing but is more that the policy initiatives seem engineered on a daily basis and the plans seem to lack a cohesive, well thought-out process.
— Chris Weston, chief market strategist at IG
Overnight, US stocks fell nearly 3%, with all three major US equity indexes solidly in negative territory for the year so far.
The downbeat US factory figures made it appear less likely that the Federal Reserve would opt to hike interest rates at its next meeting later this month, with Friday’s nonfarm payrolls report for August awaited to provide more timing clues.
Crude oil futures continued to drop after plummeting 8% overnight after the weak Chinese manufacturing data raised fears of slowing demand.
US crude was down 2.2% at $44.40 a barrel, while Brent fell 1.7% to $48.74.
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