Share prices firmed after an Asian equities selloff on Wednesday, with investors taking cues from rising commodity prices and looking past China’s worst manufacturing contraction since the global financial crisis. “Aussie has the justification to sell off”. A reading below 50 signals contraction.
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Asian stocks posted their biggest single-day fall since August. 24, with MSCI’s broadest index of Asia-Pacific shares outside Japan down 2.4 percent. The Shanghai Composite Index also lost 1.8 percent, to 3,087.32 points.
The change shows just how jittery Hong Kong investors have become, with both individuals and hedge funds unwilling to trade earlier in the day in case market sentiment changes, said Value Investment Principals’s Sandy Mehta. Prices of U.S. Treasuries and other safe-haven government debt eased.
“There is substantial concern at present that global demand weakness is dampening the economy in the industrial countries”, said Jorg Kramer, chief economist at Commerzbank. “The clock is ticking for the Fed to lift rates but the weakening data we’re seeing in China justifies the cautionary approach from the Fed“. New Zealand’s S&P/NZX 50 Index slipped 0.5 percent and India’s S&P BSE SENSEX decreased 0.3 percent.
In his first policy address during a landmark visit to the United States, Chinese President Xi Jinping pledged to implement hard economic reforms without resorting to competitive currency devaluation to boost exports.
Most Asian currencies – already pressured by looming USA interest rate hikes and a slowing China – weakened further yesterday against the USA dollar.
Elsewhere, South Korea’s Kospi fell 1.9%. In the oil & gas sector, Oil Search, Santos and Woodside Petroleum fell 1-3 percent.
CANNED FOOD: ConAgra Foods tumbled 4 percent after posting a $1.2 billion quarterly loss.
The Hang Seng Index lost 3.35 per cent on the week, while the H-share index shed 5.15 per cent.
WTI for November delivery fell 0.3 percent to $46.21 a barrel on the New York Mercantile Exchange.
The Brazilian real sank to an all-time low of 4.179 per dollar, clobbered by a recession, fiscal deficit and political instability following corruption allegations against leading politicians in Brazil, which has the world’s seventh largest economy.
The big upside from the data, however, was that the dominant service industry was able to charge higher prices for the first time in four years.
“The market reaction was immediate” following the data, said Bernard Aw, market strategist at brokerage IG.
“We recently turned positive on China banks owing to their attractive valuation, ” Barclays said in a note on Thursday, identifying China Construction Bank and China Merchants Bank as its preferred picks in the sector.
USA crude inventories probably shrank by 1.25 million barrels through september 18 for a second weekly drop, a separate Bloomberg survey showed before an Energy Information Administration report Wednesday.
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The euro rose to $1.1179, having bounced back from three-week low of $1.1105 touched on Wednesday.
