Asia Pacific shares fall sharply in wake of Paris attacks and Japanese recession
Global security concerns saw the euro hit a six-month low and stocks were sold off around the region as Japan entered a ‘quintuple dip’ recession
Stock markets in Asia Pacific have fallen sharply in the wake of the Paris terror attacks and downbeat economic data.
Leading the losers was the Nikkei index in Japan which tumbled nearly 1.3% as official figures showed that the country’s economy had entered recession for the fifth time in seven years.
The widely tracked CBOE volatility index or “fear gauge” was at its highest level since 2 October and bourses in Australia, South Korea and Hong Kong all saw substantial falls of more than 1% in early trading.
In Europe, futures trade pointed to sharp falls in the main markets with the FTSE100 predicted to be down 40 points or around 0.6% at the open and the Dax in Germany down 1%.
The French financial markets were due to open as usual on Monday, with extra security measures taken for staff, stock and derivatives, the Euronext exchange said. The CAC40 French bourse was set to open 2% lower on Monday.
With concerns about how European leaders would respond to the Paris attacks, the euro was sold heavily in Asian trading and fell to a six-month low of $1.071.
Global security concerns were better news for some commodities, however, as Brent crude oil was up 1% at $44.92 a barrel after shedding 1% on Friday. US crude was up about 0.54% at $40.96 a barrel. Gold added about 0.5% to stand at $1,091.96 an ounce.
“Risk aversion is on the rise and we are seeing broad-based U.S. dollar strength across the board and this may continue until the year end as recent economic data has also disappointed,” said Mitul Kotecha, head of Asian FX and rates strategy at Barclays in Singpore.
The Japanese economy contracted by a worse than expected 0.8% on an annualised basis in the third quarter.
That followed a revised 0.7% contraction in the previous quarter, fulfilling the technical definition of a recession which is two back-to-back quarterly contractions. It is the fifth time Japan has entered recession since 2008, a so-called “quintuple dip”.
However, the prospect of more monetary stimulus in Japan on the back of the poor growth figures served to boost traders and the indices climbed back towards positive territory in the afternoon.
“The headline was weak, but the market is shifting to expectations for more measures,” said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management.
By 5.30amGMT, the Nikkei was down 1%, the Australian benchmark ASX/S&P200 was standing 0.78% lower, the Korean Kospi 1.27% lower and the Hang Seng was down 1.52%. The Shanghai Composite had fallen 0.4%.
Source: The guardian – Asia Pacific shares fall sharply in wake of Paris attacks and Japanese recession
