Asian markets fall as new fears raised over China’s economy 

Tokyo and Shanghai main indexes fall after sharp losses the day before on Wall Street

Concern over the health of the Chinese economy has again struck Asian markets, with shares in the region plummeting to their lowest level for more than three years, after weak Chinese data prompted sharp losses on Wall Street.

In Tokyo, the Nikkei stock index fell more then 600 points in morning trading, continuing the downward pressure felt overnight in Europe and the US.

MSCI’s broader index of Asia-Pacific shares outside Japan slumped 2.2%, touching its lowest levels since June 2012 and extending early declines after Chinese shares opened lower.

China’s blue-chip CSI300 index and the Shanghai Composite Index were both down 1.8%.

Asian markets were again feeling the fallout from China, where a survey of industrial firms published Monday showed an 8.8% year-on-year decline in profits in August.

“It’s a statistic that usually doesn’t affect stock markets, but due to the breadth of the fall, the outlook on China’s slowdown and its likely global effects has darkened significantly,” Chihiro Ota, general manager of investment research at SMBC Nikko Securities, told Kyodo News.

The yen, considered a “safe haven” by investors in times of market tumult, strengthened against the dollar, with the US currency trading in the 119-yen range on Tuesday.

Recent surges by the yen have caused alarm in Tokyo, since a stronger Japanese yen hits profits made overseas by Japanese manufacturers, the driving force of the world’s third-biggest economy.

Global concern is centered on China, where industrial companies’ profits fell at their fastest rate in four years, official data showed on Monday.

“There is a lot of red in Asian equity markets at the moment,” said Martin King, co-managing director at Tyton Capital Advisors.

“Disappointing industrial profits in China continue to bolster concerns about growth and many investors are taking profits from the Nikkei and sitting in cash and alternatives, or repatriating capital to western markets in a perceived flight to quality.”

The week got off to a rocky start on Monday, with all major indexes on Wall Street closing sharply down.

The S&P 500 index hit a one-month low on bullish US consumer spending data in August as it raised concerns the Federal Reserve could hike rates at a time of slackening global growth.

Although the Fed decided not to raise interest rates at its meeting earlier this month – citing concern over China – speculation is building that the central bank could approve a rate hike as early as next month.

But Sean Callow, senior currency strategist at Westpac in Sydney, said in a note to clients on Tuesday: “Markets have heard such talk before and with equities under pressure, it was hard to take rate hike talk seriously.”

Source: The Guardian – Asian markets fall as new fears raised over China’s economy

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