Asia shares jolted by grim Chinese data, growth risks

A survey of confidence among Japan's big businesses showed they remain cautious, with worries about the global outlook offsetting fading concerns about the impact of this year's major earthquakes and typhoons.
A survey of confidence among Japan's big businesses showed they remain cautious, with worries about the global outlook offsetting fading concerns about the impact of this year's major earthquakes and typhoons.PHOTO: AFP

TOKYO (REUTERS) - Asian shares tumbled on Friday (Dec 14) after China reported a set of weak data, fanning fresh worries of a slowdown in the world's second-biggest economy and leaving investors fretting over the wider impact of a yet unresolved Sino-US trade dispute.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.3 per cent. Japan's Nikkei, also dragged down by the country's weak tankan sentiment index, dropped 2.0 per cent.

China's benchmark Shanghai Composite and the blue-chip CSI 300 closed down 1.5 per cent and 1.7 per cent, respectively, and Hong Kong's Hang Seng was off 1.5 per cent.

Financial spread-betters expect London's FTSE Frankfurt's DAX and Paris's CAC to fall between 0.7 and 0.8 per cent when they open.

China's November retail sales grew at the weakest pace since 2003 and industrial output rose the least in nearly three years as domestic demand softened further, underlining rising risks to the economy as Beijing works to defuse a trade dispute with the United States.

A Chinese statistics bureau spokesman said the November data showed downward pressure on the economy is increasing.

The data "means that the worst is yet to come and policymakers will be very worried, particularly with consumption growth falling off a cliff," said Sue Trinh, head of Asia FX strategy at RBC Capital Markets in Hong Kong.

"So I expect further support measures including rate cuts will come in coming weeks, although these data would indicate measures to date aren't really working."

The Chinese yuan weakened 0.15 per cent to 6.8888 per US dollar in offshore trade following the data.

"Although hopes of progress in US-China talks and cheap valuations are supporting the market for now, we have lots of potential pitfalls," said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.

"If US shares fall below their triple bottoms hit recently, that would be a very weak technical sign."

Overnight on Wall Street, the S&P 500 ticked down 0.02 per cent to 2,650, not far from its 6-1/2-month closing low of 2,633 touched on Nov 23, while the Nasdaq Composite dropped 0.39 per cent.

US corporate earnings due next month could throw a spotlight on the impact from the US tariffs on imports from China, while there is risk of a government shutdown and further political stalemate in a divided US congress, Kuramochi added.

In the currency market, the euro stuck in its well-worn US$1.13-US$1.14 range over the past few days, a day after the European Central Bank ended its 2.6 trillion euro bond purchase scheme but pledged to continue reinvesting maturing bonds -thereby avoiding shrinking its balance sheet- for an extended period of time.

The common currency last changed hands at US$1.1352.

"With Thursday's decision, the ECB is only taking very lightly the foot off the accelerator of monetary policy, which is by no means a real normalisation of monetary policy," said Oliver Eichmann, co-head of EMEA fixed income at DWS in Frankfurt.

Sterling's rally fizzled as signs that the British parliament was headed towards a deadlock over Brexit prompted traders to take profits from its gains made after Prime Minister Theresa May had survived a no-confidence vote.

The European Union has said the agreed Brexit deal is not open for renegotiation even though its leaders on Thursday gave May assurances that they would seek to agree a new pact with Britain by 2021 so that the contentious Irish "backstop" is never triggered.

The pound fell 0.4 per cent to US$1.2615, on track to post its fifth consecutive week of losses. It was down 0.9 per cent so far this week.

The dollar stood at 113.57 yen, flat on the day but above this week's low of 112.245 set on Monday.

The kiwi fell as much as 1.0 per cent to US$0.6861 after the central bank said it was considering almost doubling the required capital banks would need to hold to bolster the financial system's capacity to handle any shocks.

Oil prices gave up some of their Thursday's gains following inventory declines in the United States and expectations that the global oil market could have a deficit sooner than they had previously thought.

US crude futures edged down 0.6 per cent to US$52.27 per barrel and Brent crude slipped 0.8 per cent to US$60.94, after both gained more than 2.5 per cent on Thursday.

Cryptocurrency bitcoin fell as low as US$3,200, a fresh 15-month low.

A rash of bomb threats were emailed on Thursday to hundreds of businesses, public offices and schools across the United States and Canada demanding payment in cryptocurrency, but none of the threats appeared credible, law enforcement officials said.