GLOBAL MARKETS – The shares in Asia are trampled on the Wall Street route, with an eye on China


* Asian equity markets:

* Nikkei loses 3.2%, Asia ex-Japan drops 0.9%

* The culprits include high bond yields, Sino-American commercial tensions

* Trump calls the "crazy" Fed for raising interest rates

* Yen and euro in demand as safe haven, mixed dollar

By Wayne Cole

SYDNEY, Oct 11 (Reuters) – Asian equity markets sank Thursday after Wall Street suffered its worst defeat in eight months, a conflagration of wealth that could threaten business confidence and investment around the world.

It also raised the stakes for inflation figures in the United States, due later on Thursday, as a high result would only fuel the speculation of more aggressive rate hikes by the Federal Reserve.

"Stock markets are stuck in a strong sell-off, with concern over how much returns will increase, the International Monetary Fund warnings about the risks of financial stability and the continuing commercial tensions that drive uncertainty," ANZ analysts summed up .

The broader MSCI index of Asia-Pacific shares outside Japan has lost 0.9% to its lowest in 17 months.

The Japanese Nikkei rose 3.2% in early trading, which would be the biggest daily drop since March.

On Wall Street, the S & P500 suffered its biggest one-day crash since February, while technological shares have plummeted over fears of a slowdown in demand. The S & P technology sector lost 4.8%, with Apple Inc. down 4.6%.

The S & P 500 ended on Wednesday with a loss of 3.29% and the Nasdaq Composite of 4.08%, while the Dow lost 2.2%.

The blood supply was bad enough to draw the attention of US President Donald Trump, who pointed an accusing finger at the Fed for raising interest rates.

"I'm not at all agreeing with what the Fed is doing," Trump told reporters ahead of a political rally in Pennsylvania. "I think the Fed went crazy."

It was a hawkish comment from the Fed's policymakers that triggered the sudden sell-off of Treasuries last week and sent long-term returns to their highest for seven years.

The surge caused the shares to look less attractive than bonds, threatening to curb economic activity and profits.


The higher shift in yields also threatens to suck up funds from emerging markets, putting special pressure on the Chinese yuan while Beijing fights a long commercial battle with the United States.

The Chinese central bank continued to weaken its yuan, overcoming the psychological barrier of 6.9000 and leading speculators to push the dollar up to 6.9234.

This has forced the other emerging market currencies to weaken to remain competitive, and has attracted the United States to consider it an unfair devaluation.

"The yuan has weakened significantly, to offset the rates announced so far," said Alan Ruskin, global head of Deutsche's G10 FX strategy. "Further weakness could exacerbate the concerns of self-actuating capital flight and loss of control".

There was also danger to the United States if Beijing had to intervene heavily to support the yuan.

"China, buying yuan and selling dollars, will likely result in the sale of US Treasuries to a point where the market is showing some vulnerability and could be very vulnerable to China's liquidation signals," Ruskin added.

The dollar was already losing ground for both the yen and the euro, as investors favored the currencies of countries that boasted large current account surpluses.

The euro pushed up to $ 1.1538 and far from a minimum of $ 1.1429 at the start of the week. The dollar fell to 112.10 yen, a real retreat from the 114.54 peak last week.

This left the dollar at 95.408 against a basket of currencies.

In commodity markets, gold achieved a modest security offer and stood at $ 1,193.71. Oil prices slid in line with US equity markets, although energy traders have been concerned about reducing Iranian supplies from US sanctions and have been watching out for hurricane Michael, who has shut down production of the Gulf of Mexico oil in the United States.

US crude fell 52 cents to $ 72.65 in Asia, while Brent crude still has not traded after falling 2.3% overnight to finish at $ 83.09 a barrel.

Assembly of Shri Navaratnam

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