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Risk shunned as Asia eyes week's end with Kiwi stocks sliding
[WELLINGTON] Panic and uncertainty maintained a grip on financial markets as Asian investors entered the last day of the week, with government debt in the region continuing to climb and stocks extending losses in early trading.
New Zealand's benchmark slumped the most since September in its first 90 minutes of trading, as Australian 10-year bonds climbed for a fifth straight day.
US shares capped their worst four-day start to a year on Thursday, as China's flip-flopping approach to regaining order in its markets and oil's tumble to a 12-year low rattled investors.
The yen held gains near its strongest level since August as traders shunned risk assets in favour of havens, even as futures on other Asian stock indexes signaled a mixed day.
Global equities are also off to their worst annual start on record, shedding US$2.5 trillion of value in the first three days of the year amid renewed concern over China.
The country has abandoned a circuit-breaker system aimed at preventing a repeat of August's stock rout after it was triggered within 30 minutes of trading last session amid widespread market fear.
The inability of regulators in the world's second-largest economy to quell the turmoil has heightened anxiety, with oil's drubbing fueling a separate set of concerns: over the outlook for global inflation and the impact on central bank monetary policy.
"China's stock market is among the world's most expensive, the macroeconomic fundamentals are deteriorating and investors have been spooked by the incessant fudges to the market by the regulators." Jason Wong, a currency strategist in Wellington at Bank of New Zealand Ltd, said in an e-mail to clients. "It was tempting to just resend out yesterday's report and head back to bed for similar themes are at play."
The S&P/NZX 50 Index lost 1.3 per cent as of 7.46am Tokyo time, as dairy producers to exchange operators drove declines in Wellington.
While futures on indexes in Australia and South Korea indicated further losses Friday, those on stock gauges in Japan and Hong Kong signaled potential rebounds, with contracts on the Hang Seng China Enterprises Index, which tracks mainland Chinese shares listed in Hong Kong, up 0.8 per cent in most recent trading.
The Standard & Poor's 500 Index slid 2.4 per cent in New York, leaving it down 4.9 per cent this year, its worst start in data going back to 1928.
The MSCI All-Country World Index fell for a fourth day, bringing its slide in 2016 to more than 5 per cent.
China's devaluation revived the angst that sent financial markets into turmoil last summer, driving US stocks to three-month lows on Wednesday in a selloff led by commodity producers. Comments by billionaire investor George Soros exacerbated market jitters after he told an economic forum in Sri Lanka Thursday that global markets are facing a crisis and investors need to be very cautious.
Australia reports on retail sales Friday, and Japan updates on earnings. Thailand and Indonesia post data on foreign-currency reserves and Taiwan reports on trade.