Asian stocks see losses on the first trading day of 2019
South Korea’s Kospi slipped 1.52 percent to close at 2,010.00, despite shares of industry heavyweight Samsung Electronics and chipmaker SK Hynix gaining 0.13 percent and 0.17 percent, respectively.
The ASX 200 in Australia ended its trading day lower by 1.57 percent at 5,557.80. The heavily-weighted financial subindex fell 2.01 percent as shares of the so-called Big Four banks Down Under declined. Australia and New Zealand Banking Group dropped 2.45 percent, Commonwealth Bank of Australia slipped 1.96 percent, Westpac declined by 2.24 percent and National Australia Bank shed 1.83 percent.
The Japanese stock markets were closed for a public holiday on Wednesday.
One investor warned that 2019 could be a “continuation” of 2018.
“We expect to see a lot more volatility to continue to plague markets, at least in the foreseeable future,” Ken Wong, Asia equity portfolio specialist at Eastspring Investments, told CNBC’s “Street Signs” on Wednesday.
“You do have a lot of uncertainty still over geopolitical noise that’s going on. You have earnings gradually slowing down a bit and so, as a result, you know, you’re not seeing a lot of ... positive sentiment and good vibes in the market place,” Wong said.
The moves came after a private survey showed manufacturing activity in China contracted for the first time in 19 months in December.
The Caixin/Markit Manufacturing Purchasing Managers’ index (PMI), fell to 49.7 from 50.2 in November — its first contraction since May 2017.
A reading above 50 indicates expansion, while a reading below that level signals contraction.
Economists polled by Reuters had expected only a marginal dip from November to 50.1.
“It is confirming that we know that the trade war has had an impact,” Gareth Nicholson, head of fixed income at Bank of Singapore, told CNBC minutes after the data release on Monday. Nicholson was referring to the ongoing Sino-U.S. trade war.
“The stimulus measure is probably needed if they want ... to kind of keep up the growth levels that they have had. The PMI is kind of showing that,” Nicholson said.
Official manufacturing PMI released on Monday showed a slowdown in activity for the month of December as the sector contracted for the first time in more than two years, dropping below the critical 50 level.
Referring to Monday’s data, Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a morning note: “China’s manufacturing PMI slumping to almost three year-lows of 49.4 (the first contractionary read since mid-2016 and lowest since Feb 2016) justifiably raises a few red flags; and not just for China, with Asian exporters likely to feel the ripples.”
“The devilish details arguably render this slump even more worrying; even if the downturn is not entirely surprising given more challenging global trade conditions,” the economist said.
The private survey focuses on small and medium-sized enterprises while the official PMI gauge focuses on large companies and state-owned enterprises.
Meanwhile, Hong Kong’s Hang Seng index fell around 3 percent, as of its final hour of trading, with shares of Chinese tech heavyweight Tencent declining approximately 2.4 percent.
Asia-Pacific Market Indexes Chart
|NIKKEI||Nikkei 225 Index||NIKKEI||20014.77||-62.85||-0.31|
|HSI||Hang Seng Index||HSI||25130.35||-715.35||-2.77|
|ASX 200||S&P/ASX 200||ASX 200||5557.80||0.00||0.00|
|CNBC 100||CNBC 100 ASIA IDX||CNBC 100||7230.57||-73.84||-1.01|
In a congratulatory message to Trump, marking 40 years since the establishment of diplomatic relations between the two countries, Xi said China-U.S. relations have experienced ups and downs but have made historic progress over the past four decades, according to state news agency Xinhua.
Xi’s comments came on the back of Trump’s tweet that a “long and very good call ” had taken place between the two.
Both Trump and Xi agreed to a 90-day pause in tariff escalation in December 2018. The two countries have made plans for face-to-face consultations over trade in January, China’s Commerce Ministry said recently.
The ongoing Sino-U.S. trade war dominated headlines for much of 2018 as they rattled global stocks, with both Chinese and U.S. markets seeing their worst annual performances in a decade.
Xi also delivered a major speech in Beijing on Wednesday about China’s ties with Taiwan, a highly sensitive issue dominating Chinese politics. The Chinese leader reiterated his stance that the island is part of China and said foreigners should not intervene in matters related to Taiwan’s independence.
The Japanese yen was at 109.20 against the dollar after touching lows above 110.4 on Monday. The Australian dollar traded at $0.7035 following an earlier high of $0.7053.
— Reuters and CNBC’S Huileng Tan contributed to this report.
European stocks close mixed amid global growth concerns, basic resources down 1.8%
European Markets: FTSE, GDAXI, FCHI, IBEX
Most sectors were in the red at the end of the session, with basic resources shedding the most value and closing down 1.8 percent.
Global miners were weak amid lower copper prices and concerns over economic growth in leading metals consumer China. Mining giant Antofagasta was down 1.6 percent, while BHP Group’s shares fell by 1.2 percent. Many U.K. manufacturers are reportedly stockpiling materials ahead of Britain’s departure from the EU in March.
Data showing the first slowdown in Chinese factory activity in 19 months sent shares lower in Europe, with those most exposed to the Asian market feeling some impact. HSBC shares were trading down slightly lower, while Standard Chartered lost half a percent.
In other news, euro zone data also disappointed, with IHS Markit’s December final manufacturing PMI reading coming in at 51.4, down from 51.8 in the previous month and the lowest reading since February 2016. However, manufacturing output PMI came in at 51, higher than November’s 50.7.
Sterling, meanwhile, slumped more than 1 percent, to hit $1.2592 as recent data showed that British industries were ramping up their stockpiling in December amid growing uncertainty surrounding Brexit.
Stateside, stocks slid on the back of the weak data from Asia and Europe. Both the S&P 500 and the Dow Jones Industrial Average were in the red, although the Nasdaq saw a rise of 0.2 percent. The U.S. government shutdown continues to add to political uncertainty, as the dispute between Democrats and President Donald Trump over the funding of a wall at the Mexican border reached an impasse.
Meanwhile China and the U.S. are trying to resolve trade tensions over a 90-day truce period, with President Donald Trump saying last week that he and Chinese President Xi Jinping “had a long and very good call” covering “all subjects, areas and points of dispute.”
Gold and the Japanese yen were the beneficiaries of the volatility and geopolitical uncertainty as traders flocked to safe-haven investments. Gold topped six-month highs, while the yen reached a seven-month peak.
Wednesday also saw the Frankfurt prosecutor drop a probe against former Deutsche Boerse CEO Carsten Kengeter, who was being investigated for insider trading.
Shares of other Italian lenders fell, with Banco BPM off by 1.6 percent and UBI Banca down 1.9 percent.
In corporate news, Deutsche Telekom has reportedly filed a lawsuit against the German government over a 5G auction. German newspaper Die Welt reported Tuesday that the telecommunications giant’s lawsuit contested a set of preconditions for participating in the auction, which would require bidders to invest to expand the country’s mobile network and potentially allow new entrants to use their infrastructure.
Elsewhere, traders are looking ahead to an upcoming joint discussion between Federal Reserve Chairman Jerome Powell and former Fed chiefs Janet Yellen and Ben Benanke later this week. The Fed hiked interest rates four times in 2018, but expectations for further increases this year have soured amid concerns around waning economic growth.
Stocks rise, barely, on first day of trading after swinging around all day
The Dow Jones Industrial Average closed 18.78 points higher at 23,346.24 after dropping nearly 400 points earlier in the day. The S&P 500 gained 0.1 percent to close at 2,510.03 while the Nasdaq Composite climbed 0.46 percent to 6,665.94. At their lows of the day, the S&P 500 were both down more than 1 percent. Volatility was rampant in December as the S&P 500 posted its worst December since the great depression, leading to its worst year since the financial crisis in 2008.
“Finally, we’re starting to see this buy-the-dip mentality creep into the market,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management. “It’s because of valuations and it’s because the underlying data has been pretty good so far, albeit a bit softer.”
“I think the market has accepted that, it’s now capitulated and I think we grind higher here,” Blancato said.
Facebook and Amazon rose 3.5 percent and 2.5 percent, respectively, to help the Nasdaq recover its losses. Bank shares erased earlier losses as Goldman Sachs, Bank of America and J.P. Morgan Chase all climbed more than 1 percent.
Energy stocks also contributed to the move off the lows. The S&P 500 energy sector rose 2.1 percent, led by gains in Cabot Oil and Hess, as U.S. crude surged 2.5 percent.
Stocks initially fell on Wednesday after a private sector survey showed manufacturing activity in the world’s second-largest economy contracted for the first time in 19 months. China’s Markit Manufacturing Purchasing Managers’ Index (PMI) for December dipped to 49.7 from 50.2 in November.
Meanwhile, the euro zone manufacturing PMI remained at its lowest level since February 2016, according to IHS Markit. The data also showed confidence about the future hit a fresh six-year low. In the U.S., the IHS Markit manufacturing PMI slipped to a 15-month low in December.
“Everybody is terrified that this is a sign of a global slowdown,” Art Cashin, director of floor operations at UBS, told CNBC’s “Squawk on the Street. ” “It was only eight months ago we were talking about synchronized growth and all of that is falling apart.”
The weaker-than-expected data follows a poor official survey on factory output, compounding concerns about a possible economic slowdown this year.
Spencer Platt | Getty Images
Wall Street concluded trading in 2018 on Monday, with all major stock indexes registering their worst yearly performances since the financial crisis.
Despite solid gains on Monday, the S&P 500 and Dow Jones Industrial Average were down 6.2 percent and 5.6 percent, respectively, for 2018. Both indexes posted their biggest annual losses since 2008, when they plunged 38.5 percent and 33.8 percent, respectively. The Nasdaq Composite lost 3.9 percent in 2018, its worst year in a decade, when it dropped 40 percent.
“I think this is a temporary headline-driven issue,” said Dryden Pence, chief investment officer at Pence Wealth Management. “We see a market that is disconnected from our view of the 2019 fundamentals. Because of that, we see more opportunity than risk at these prices.”
The S&P 500 and Nasdaq also registered their worst quarterly performances since late 2008, while the Dow logged its biggest quarterly loss since 2009. A sizable chunk of this quarter’s losses came during a violent December. The indexes all dropped at least 8.7 percent for the month. The Dow and S&P 500 also recorded their worst December performance since 1931.
Craig Johnson, chief market technician at PiperJaffray, said the market is set up for a bounce after those losses.
“While acknowledging there are fundamental concerns, we do not believe the current economic backdrop warrants the degree of bearish sentiment and suspect the proverbial bar for stocks has dropped significantly,” Johnson said in a note to clients. “Technically, we continue to see signs of an intermediate-term bottom emerging and recommend investors tactically deploy capital back into equities.”