The strength of the U.S. economy is key to a Federal Reserve move on interest rates and more weakness could push back a hike – which is a plus for the dollar – into 2016.
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Factory gauges on the U.S.to the euro area and Japan are due Monday, along with a private index of Chinese manufacturing, giving investors insight into the state of the global economy following the market turmoil of the third quarter.
Wall Street finished lower Friday, as traders awaited fresh U.S. trade and October employment figures as well as congressional testimony by Fed Chair Janet Yellen this week.
Evidence of stagnation at Chinese factories weighed on markets Monday, as Asian stocks slid with copper and oil ahead of a swathe of global manufacturing data.
Elsewhere, futures on stocks traded in Hong Kong also signaled declines, with contracts on the Hang Seng Index falling 0.4 percent in most recent trading, as did those on the Hang Seng China Enterprises Index.
The Nikkei 225 index at the Tokyo Stock Exchange had tumbled 399.86 points to 18,683.24 by the close, while the broader Topix index of all first-section shares sank 2.00 percent, or 31.23 points, to 1,526.97. FTSE China A50 Index futures dropped 0.8 percent.
In share trading, Sharp dropped 4.51 percent to 127 yen by the break after the embattled firm said Friday that it posted a whopping six-month net loss of almost $700 million. It last traded at $1,139.25.
The dollar stood unchanged at 120.55 yen after losing 0.4 percent on Friday, when the BOJ wrong-footed investors who had wagered that the Japanese central bank would ease policy. The currency gained at the end of last week after the Bank of Japan held off on boosting stimulus despite inflation languishing below its target.
In a morning note, Morgan Stanley analysts said it appeared that Draghi had stiffened the bank’s policy stance, saying that more stimulus in December is an open question.
By far the biggest victor in the currency market was the Turkish lira, which soared 5.6 percent to 3-month high of 2.758 lira per dollar after the ruling AK Party swept to an unexpected election victory on Sunday.
The Australian dollar was business at $0.7140.
Caixin’s purchasing managers’ index edged up to 48.3 in October, marking the eighth-straight month of contraction, while the country’s official PMI came in at 49.8, missing market expectations of a 50.0 level.
Barclays said China’s oil demand growth for September, adjusted for inventories, slowed to 226,500 barrels per day (bpd), or 2.1 percent, compared with the same month last year, much lower than the 6.3-percent gain registered for the first three quarters of the year. This year’s growth target was about 7 percent.
The euro extended its Friday gains, rising 0.3 percent to $1.1038.
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Analysts said there were also shifts taking place within the markets of different oil products.
