Global Economic Slowdown Fears Pressure Asian Shares

Given the escalating violence in Hong Kong, traders will be keeping a keen eye on the Hong Kong retail sales data for August. The sector has taken a hit amid protracted protests in the city that have lasted for months and periodically degenerated into violence.
James Hyerczyk
Asia Pacific Stocks

The major Asia Pacific stock indexes traded lower on Wednesday, following Wall Street’s lead, amid renewed fears of a global economic slowdown. The catalyst behind the weakness was a report on Tuesday that showed manufacturing activity in the U.S. contracted to its worst level since June 2009. This news was preceded by similar data from Europe.

At 05:21 GMT, Japan’s Nikkei 225 Index is trading 21775.21, down 110.03 or -0.50%. South Korea’s KOSPI Index is at 2040.52, down 31.90 or -1.54% and Hong Kong’s Hang Seng Index is trading 26050.97, down 41.30 or -0.16%.

In Australia, the S&P/ASX 200 Index is at 6656.50, down 86.30 or -1.28%. The markets are closed in China.

US Manufacturing Survey Shows Worst Reading in 10-Years

According to CNBC, a gauge of U.S. manufacturing showed the lowest reading in more than 10 years in September as exports dived amid the escalated trade war.

The U.S. manufacturing purchasing managers’ index from the Institute for Supply Management came in at 47.8% in September, the lowest since June 2009, marking the second consecutive month of contraction. Any figure below 50% signals a contraction.

The new export orders index was only 41%, the lowest level since March 2009, down from the August reading of 43.3%, ISM data showed.

“Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019. Overall, sentiment this month remains cautious regarding new-term growth,” Timothy Fiore, ISM chair, said in a statement.

Traders Watching Hong Kong Retail Sales Report

Given the escalating violence in Hong Kong, traders will be keeping a keen eye on the Hong Kong retail sales data for August, due to be released at 4:30 p.m. HK/SIN or 08:30 GMT. The sector has taken a hit amid protracted protests in the city that have lasted for months and periodically degenerated into violence. Additionally, the on-going U.S.-China trade war, has also been taking a toll on Hong Kong’s economy. Weak data could drive stocks lower.

“There is a recession underway in Hong Kong at the moment,” Isaac Poole, chief investment officer of Oreana Financial Services, told CNBC’s “Street Signs” on Wednesday.

“If we look back at the data we’ve now had three quarters of negative growth in the last five…in Hong Kong,” Poole said, adding that the third quarter this year is likely to be negative.

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