Asia: Markets mostly down as global investors retreat

[HONG KONG] Asian markets sank once again on Friday as the global sell-off intensified, while Chinese growth slowed in the third quarter, adding to concerns about the world's number two economy.

With investors being swiped by a series of problems including rising US interest rates, geopolitical tensions and the China-US trade conflict, they are running to the hills as they seek out safe havens.

Another round of mixed earnings out of Wall Street and expectations the Federal Reserve will lift borrowing costs for some time also weighed, helping to send all three major indexes in New York sharply lower.

Treasury Secretary Steven Mnuchin's decision to pull out of a huge investment summit in Saudi Arabia added to the unease as it was the clearest indication yet of the White House distancing itself from Riyadh over the disappearance of a journalist.

Those losses spread to Asia, with a slowdown in China's growth providing further concern.

The economy expanded 6.5 per cent on-year in the third quarter, the weakest rate since 2009.

The numbers were in line with forecasts in an AFP poll but much slower than the 6.7 per cent seen in the previous three months, and were hit by the US trade row and a deleveraging drive.

The result is the latest highlighting weakness in China, a crucial driver of global economic growth, with observers predicting the government will unveil fresh support measures following a series of moves earlier this year.

"We expect further escalation of US-China trade tensions going into 2019, which will likely be partially offset by yuan adjustment and more growth-supportive fiscal and monetary policies," JPMorgan economists led by Zhu Haibin, wrote.

"We expect fiscal and monetary policies to become more growth-supportive, providing a lift to headline GDP growth."

Still, Shanghai bounced from initial losses to sit 0.2 per cent higher as the central bank, the banking and insurance regulator, and the securities regulator made a concerted effort to stem a sell-off that has seen the composite index lose about 30 per cent this year.

The group said they would provide help for under-pressure firms that have been battered by this year's rout.

However, other markets in the region were down. Tokyo lost more than one percent going into the break, Hong Kong was down 0.6 per cent, Sydney fell 0.2 per cent, Seoul lost 0.3 per cent and Singapore was 0.4 per cent off.

Wellington, Taipei, Manila and Jakarta were also sharply lower.

And while the US economy and markets remain healthy, there are warnings the troubles in China, where the yuan is heading to 7 per dollar for the first time since the start of 2017, could spread.

"While the US markets have been somewhat insulated from China equity market meltdowns this year, that strong historical correlation that 'when China sneezes the rest of the world catches the flu' is starting to take hold," said Stephen Innes, head of Asia-Pacific trade at Oanda.

Traders are keeping an eye on Europe where Brussels hit out at the big-spending budget of Italy's populist government, which has fuelled concerns of another crisis in the bloc at the same time it struggles to agree a Brexit deal with Britain.

On foreign exchanges the dollar pressed ahead against high-yielding and emerging market currencies, which have been hit by rising Fed rates.

Oil prices edged up after Thursday's sharp losses that were caused by a surprise jump in US stockpiles, while fears about the Chinese outlook are also weighing.

Adding to downward pressure is speculation that major producer Saudi Arabia could weaponise the commodity and dramatically raise output as it comes under pressure over the mystery surrounding missing journalist Jamal Khashoggi.

AFP