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Asian Markets Fall On Recession Fears

asian down 14aug19 lt

Asian stock markets are sharply lower on Thursday following the overnight sell-off on Wall Street as an inverted bond yield curve in the U.S. stoked fears of a recession. The yield on the benchmark ten-year U.S. Treasury note dropped below the yield on the two-year note overnight. The inversion is widely seen as an indicator of a recession.

The Australian market is notably lower following the overnight sell-off on Wall Street amid concerns about a potential recession. Investors are also cautious as they digested mixed corporate earnings results and Australia's unemployment data for July.

The benchmark S&P/ASX 200 Index is declining 129.40 points or 1.96 percent to 6,466.50, after falling to a low of 6,464.80 earlier. The broader All Ordinaries Index is down 133.00 points or 1.99 percent to 6,544.50. Australian stocks fluctuated before ending modestly higher on Wednesday.

Oil stocks are tumbling after crude oil prices fell more than 3 percent overnight. Santos is falling almost 5 percent, and Oil Search is losing more than 4 percent.

Woodside Petroleum reported a decrease in profit for the half year and cut its interim dividend. The oil and gas company's shares are losing more than 5 percent.

The big four banks are also sharply lower. National Australia Bank, Westpac, ANZ Banking and Commonwealth Bank are down in a range of 1.8 percent to 2.2 percent.

QBE Insurance's shares are edging down 0.1 percent after the insurance giant recorded a 29 percent increase in first-half profit.

The major miners are also weak. Fortescue Metals is lower by almost 2 percent, while BHP Group and Rio Tinto are declining more than 2 percent.

Bucking the trend, gold miners are advancing after gold prices rose overnight. Evolution Mining is rising almost 3 percent and Newcrest Mining is higher by more than 2 percent.

Telstra said its full-year profit fell 40 percent from last year on restructuring costs and forecast lower income for the next year. The company also cut its final dividend. The telecom giant's shares are declining almost 1 percent.

Treasury Wine Estates said its full-year profit rose 16 percent on double-digit revenue growth and raised its final dividend. The wine maker's shares are rising more than 2 percent.

Blackmores reported a more than 23 percent fall in full-year profit and slashed its final dividend. The vitamin and supplement maker's shares are losing almost 6 percent.

On the economic front, the Australian Bureau of Statistics said that the unemployment rate in Australia came in at a seasonally adjusted 5,2 percent in July, unchanged from the previous month and in line with expectations.

The Australian economy added 41,100 jobs last month, far surpassing expectations for a gain of 14,000 jobs following the increase of 500 jobs in June.

In the currency market, the Australian dollar is lower against the U.S. dollar on Thursday. The local currency was quoted at $0.6756, compared to $0.6782 on Wednesday.

The Japanese market is sharply lower and the safe-haven yen strengthened following the overnight sell-off on Wall Street amid concerns about a potential recession after the yield on the benchmark ten-year U.S. Treasury note dropped below the yield on the two-year note.

The benchmark Nikkei 225 Index is losing 352.72 points or 1.71 percent to 20,302.41, after touching a low of 20,184.85 earlier. Japanese shares rose sharply on Wednesday.

The major exporters are lower on a stronger yen. Mitsubishi Electric is losing almost 3 percent, while Panasonic and Canon are declining more than 2 percent each. Sony is lower by more than 1 percent.

In the tech space, Advantest is declining more than 2 percent and Tokyo Electron is lower by almost 2 percent.

Market heavyweight SoftBank is losing almost 3 percent and Fast Retailing is down more than 2 percent. In the auto sector, Honda Motor is lower by 2 percent and Toyota Motor is declining more than 1 percent.

Among oil stocks, Japan Petroleum is down more than 2 percent and Inpex is lower by almost 3 percent after a fall in crude oil prices overnight.

Among the worst performers, Unitika is losing 5 percent, while Taiyo Yuden and JXTG Holdings are lower by more than 4 percent each.

On the economic front, Japan will see final June figures for industrial production today.

In the currency market, the U.S. dollar is trading in the upper 105 yen-range on Thursday.

Elsewhere in Asia, New Zealand and Singapore are declining more than 1 percent each, while Taiwan, Indonesia and Malaysia are all lower by almost 1 percent each. Shanghai is also lower.

Bucking the trend, Hong Kong is modestly higher. The markets in South Korea and India are closed for holidays.

On Wall Street, stocks tumbled Wednesday amid concerns about a potential recession after the yield on the benchmark ten-year note dropped below the yield on the two-year note. The inversion is widely seen as an indicator of a recession, although data from Credit Suisse shows the economic downturn typically does not occur until almost two years later.

The Dow plummeted 800.49 points or 3.1 percent to 25,479.42, the Nasdaq plummeted 242.42 points or 3 percent to 7,773.94 and the S&P 500 tumbled 85.72 points or 2.9 percent to 2,840.60.

The major European markets also showed significant moves to the downside on Wednesday. The U.K.'s FTSE 100 Index tumbled by 1.4 percent, the French CAC 40 Index and the German DAX Index plunged by 2.1 percent and 2.2 percent, respectively.

Crude oil prices plummeted on Wednesday on increasing worries about the outlook for global demand and a supply glut. Crude for September delivery climbed off its worst levels but still tumbled $1.87 or 3.3 percent to $55.23 a barrel.

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