Asian Stock Market on Shaky Ground After Weak Data from China

BEIJING, China – Asian stock market remains on shaky ground on Thursday as data from China and Japan indicated that the ongoing trade war between the US and Beijing are impacting the economy of the two superpowers.

According to the MSCI, shares in Asia Pacific dropped by 0.3% while the Nikkei of Japan slipped by 0.8%. Australia’s ASX200/S&P showed gains earlier in the day but later lost them. The index has since closed at 0.5% higher. The Hang Seng Index (HSI) dipped by 0.8% to hit a one-month low.

US trade futures declined by 0.1% after it closed on a groundbreaking S&P 500 high on Wednesday. The SPX benefited from a positive surge in shares for Walt Disney’s DIS.N. However, Europe’s stock futures indicated a flat opening after the recent upwards movement.

In the foreign exchange market, gold, franc, and yen safe havens held on to their gains. The yen was pegged at 108.73 to a dollar while the Swiss franc was trading at 0.9901 against the USD. The Australian dollar fell to a one-month low after a weak employment reading restarted speculations of another interest rate cut.

China’s production growth showed a drastic slowdown in October. The country’s 4.7% yearly rise placing beneath assessments for 5.4% improvement. Any expectations for an investment growth fled when China reached a record low and retail sales failed to hit their mark.

Shane Oliver, AMP Capital’s chief economist, said the sluggishness in production and investment hints of a lack of confidence. It places additional pressure on China’s leadership to reach a trade deal with US President Donald Trump. Conversely, the American leader’s aspirations to be re-elected will also put more pressure on him to agree to a deal.

Unfortunately, the weak economic numbers arrived just as investor confidence on a possible trade deal begins to waver. A recent poll from Reuters has even shown that many economists don’t believe China and Japan would have resolved their issues by next year.

Trump’s omission of the state of trade negotiation on Tuesday certainly didn’t bode well for investors. It was compounded by a Wall Street Journal report that discussions bogged down over farm purchases.

While this is happening, the fallout from China and the US’ bickering is expanding and slowly being felt.

Traders are waiting for data from Germany that will reveal if the country is entering into a technical recession. Japan is experiencing its slowest economic growth as limited demand skewered their export numbers.

Jefferies’ Sean Darby pointed out that there have been several near misses when it comes to recession in the region. The Hong Kong-based global strategist mentioned South Korea, Singapore, and Hong Kong as examples.