Asia’s major markets edged into the red on Monday as weak Chinese economic data, fears of a resurgent coronavirus and the Taliban’s victory in Afghanistan gnawed at investor sentiment.
Retail sales in China expanded 8.5% in July year-on-year and industrial output was up 6.4%, according to figures released by Beijing’s statistics bureau, with both figures below analyst estimates.
Lockdowns and other movement restrictions brought in to combat the country’s recent coronavirus outbreaks have been blamed for hampering economic performance along with a series of deadly floods.
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Raymond Yeung, chief economist for Greater China at ANZ Banking Group, said the figures “suggest the economy is losing steam very fast”. Surging infections linked to the Delta variant of the coronavirus “also adds extra risk to August’s activities”, he added.
Market watchers were also following developments in Afghanistan, where the Taliban have claimed total victory in the country’s 20-year war.
“Weaker economic data emanating from China has spoiled the mood, with lower readings on retail sales and industrial production raising questions on whether the recovery momentum can be maintained,” noted Richard Hunter, head of markets at Interactive Investor.
“In addition, there remain some health issues in Asia generally, while geopolitical concerns have also surfaced following the developments in Afghanistan and the implications for the future of the region.”
SYDNEY DIPS
There were dips in Sydney, Singapore, Taipei, Wellington and Jakarta, as well as Hong Kong.
The Hang Seng Index fell 0.80%, or 210.16 points, to 26,181.46. The Shanghai Composite Index edged up by 0.03%, or 1.05 points, to 3,517.34, while the Shenzhen Composite Index on China’s second exchange eased 0.58%, or 14.38 points, to 2,454.36.
In Tokyo, the benchmark Nikkei 225 index closed down for a third consecutive session on Monday despite government data showing a 0.3% rise in GDP – slightly more than expected after a surge in virus infections and new restrictions.
The Nikkei dropped 1.62%, or 453.96 points, to 27,523.19, while the broader Topix index fell 1.61%, or 31.41 points, to 1,924.98.
TAPERING FEARS
And long-lingering fears over an end to the US Federal Reserve’s vast financial support put in place at the start of the pandemic continued to weigh on sentiment as well.
Traders will be keeping an eye on Fed boss Jerome Powell’s speech at this month’s gathering of central bank and finance leaders in Jackson Hole, Wyoming, hoping for a hint at when he will act.
“Markets are going to have to get comfortable with potential tapering from the US Federal Reserve sometime next year,” Martin Lakos of Macquarie Bank said.
MARKETS
Tokyo – Nikkei 225: DOWN 1.62% at 27,523.19 (close)
Hong Kong – Hang Seng Index: DOWN 0.8% at 26,157.07 (close)
Shanghai – Composite: UP 0.03% at 3,517.34 (close)
New York – Dow: UP 0.1% at 35,515.38 (close)
- AFP and Sean O’Meara
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