Asian stock markets were aggressively lower on Tuesday, as poor economic report from US hyped the already sour market sentiment.
Japan led the region lower, with the Nikkei drop 3.2% in early trading, following a disappointing US economic data from the US smashed stocks in Wall Street. The index is close to a 2% fall on Monday, which formally put it in a correction, denoted as a fall of at least 10% from the latest closing high.
“It had been thought that the capital outflows experienced by emerging markets in the wake of the U.S. Fed’s tapering program would have no backlash on the U.S. economy, but now it isn’t so clear,” said Okasan Securities Director Takashi Matsumoto.
In addition, Australia’s S&P/ASX 200 missed 1.6% and South Korea’s Kospi dived 1.6%.
“The risk off investor sentiment looks really well entrenched, and it is not only reflecting what is going on emerging markets, but what is going on in the advanced economies,” said Perpetual Head of Investment Market Research Matthew Sherwood.
The Dow Jones Industrial Average dropped 2.1% on Monday, following a weak data from the Institute for Supply Management that reported a market downshift in the US manufacturing activity. Its purchasing managers index went down to 51.3 last month, which is considered as the lowest reading since May that is way lower than its projected 56 reading.
A reading above 50 signifies a proliferation in manufacturing activity but a score below 50 leads to a contraction.
“We have been bombarded with negative headlines and data points and it just adds to the gloom. There is no obvious light at the end of the tunnel,” said HSBC Head of Asian Currency Research Paul Mackel.
US jobs data for January, to be reported on Friday, are now being more closely monitored for any hint as to what the US Federal Reserve may do. The US central bank decided to further cut down its monetary stimulus last week, amidst the dismal December jobs report.
Signs that the US economic recovery may be stalling could oblige the Fed to stop its tapering program, which diminish the dollar’s ascending momentum.
“The poor jobs numbers in December were said to be due to bad weather, so the base scenario has been that it’ll be okay this time. But there are worries that the figures may be bad this time as well,” said HSBC Head of FX Kosuke Hanao.
The souring market sentiment aided assets that lean to gain from times of economic downturn such as the yen. The dollar lost a total of 1.05% against the Japanese currency in the last session, though it recovered early on Tuesday—it was last listed at ¥101.19, as compared to ¥100.96 on Monday.
The sharp stock plunges a global sell-off that began in January, with hefty selling in emerging markets such as Turkey and Argentina scattering into developed markets. In addition to concerns over emerging markets, weak factory data from China, as well the Fed’s continuous cutting of bond-buying program, have also incurred to the negative sentiment.
The material has been provided by InstaForex Company – www.instaforex.com
Asian stock markets were aggressively lower on Tuesday, as poor economic report from US hyped the already sour market sentiment.
Japan led the region lower, with the Nikkei drop 3.2% in early trading, following a disappointing US economic data from the US smashed stocks in Wall Street. The index is close to a 2% fall on Monday, which formally put it in a correction, denoted as a fall of at least 10% from the latest closing high.
“It had been thought that the capital outflows experienced by emerging markets in the wake of the U.S. Fed’s tapering program would have no backlash on the U.S. economy, but now it isn’t so clear,” said Okasan Securities Director Takashi Matsumoto.
In addition, Australia’s S&P/ASX 200 missed 1.6% and South Korea’s Kospi dived 1.6%.
“The risk off investor sentiment looks really well entrenched, and it is not only reflecting what is going on emerging markets, but what is going on in the advanced economies,” said Perpetual Head of Investment Market Research Matthew Sherwood.
The Dow Jones Industrial Average dropped 2.1% on Monday, following a weak data from the Institute for Supply Management that reported a market downshift in the US manufacturing activity. Its purchasing managers index went down to 51.3 last month, which is considered as the lowest reading since May that is way lower than its projected 56 reading.
A reading above 50 signifies a proliferation in manufacturing activity but a score below 50 leads to a contraction.
“We have been bombarded with negative headlines and data points and it just adds to the gloom. There is no obvious light at the end of the tunnel,” said HSBC Head of Asian Currency Research Paul Mackel.
US jobs data for January, to be reported on Friday, are now being more closely monitored for any hint as to what the US Federal Reserve may do. The US central bank decided to further cut down its monetary stimulus last week, amidst the dismal December jobs report.
Signs that the US economic recovery may be stalling could oblige the Fed to stop its tapering program, which diminish the dollar’s ascending momentum.
“The poor jobs numbers in December were said to be due to bad weather, so the base scenario has been that it’ll be okay this time. But there are worries that the figures may be bad this time as well,” said HSBC Head of FX Kosuke Hanao.
The souring market sentiment aided assets that lean to gain from times of economic downturn such as the yen. The dollar lost a total of 1.05% against the Japanese currency in the last session, though it recovered early on Tuesday—it was last listed at ¥101.19, as compared to ¥100.96 on Monday.
The sharp stock plunges a global sell-off that began in January, with hefty selling in emerging markets such as Turkey and Argentina scattering into developed markets. In addition to concerns over emerging markets, weak factory data from China, as well the Fed’s continuous cutting of bond-buying program, have also incurred to the negative sentiment.
The material has been provided by InstaForex Company – www.instaforex.com
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