HONG KONG – Asian stocks were mostly lower Wednesday on investor anxiety about a looming U.S. interest rate hike while European markets rebounded from a similar drop the day before.
KEEPING SCORE: In early European trading, France’s CAC-40 jumped 1.1 per cent to 4,937.41 and Germany’s DAX added 0.9 per cent to 11,607.40. Britain’s FTSE 100 rose 0.5 per cent to 6,734.73. U.S. stocks were poised to open higher, with Dow futures up 0.3 per cent to 17,720.00. Broader S&P 500 futures climbed 0.4 per cent to 2,049.80.
FED FEARS: The prospect that the Federal Reserve will soon raise interest rates for the first time in nine years is unsettling investors. Those odds got a boost after recent data revealed a strengthening job market, most recently with a government report Tuesday that found number of U.S. job postings in January was the highest in 14 years. At the same time, central banks in Europe, Japan, Australia and elsewhere are moving in the opposite direction by bringing down borrowing costs to jumpstart their stagnating economies. Low interest rates and other monetary stimulus have supported stocks for several years but a rate hike from the Fed will foreshadow a return to more levels for credit costs.
CHINA FOCUS: Investors examined the latest batch of monthly economic data on China for clues on the state of the world’s No. 2 economy. Industrial output for January and February rose 6.8 per cent, according to the official Xinhua news agency. The number was less than analysts expected. Retail sales and fixed-asset investment also disappointed. China’s economy is expected to slow further after growing 7.4 per cent last year, the lowest growth rate in nearly a quarter-century. The government issues the figures for both months together to smooth out distortions from Lunar New Year, which can fall in either month.
ANALYST TAKE: Along with the U.S. rate worries, softer Chinese data “contributed to the souring of the market’s mood,” Rabobank analysts wrote in a commentary. “The current trend in economic activity implies that the official government target for GDP growth set at 7.0 per cent year-on-year is optimistic and supports our view that the People’s Bank of China will ease policy further.”
ASIA’S DAY: Japan’s Nikkei 225 gained 0.3 per cent to close at 18,723.52, getting some relief from the regional down trend as the dollar strengthened against the yen. South Korea’s Kospi lost 0.2 per cent to 1,980.83 and Hong Kong’s Hang Seng slipped 0.8 per cent to 23,717.97. The Shanghai Composite Index in mainland China swung between gains and losses before edging up 0.2 to close at 3,290.90. Australia’s S&P/ASX 200 ended 0.5 per cent lower at 5,793.20. Most benchmarks in Southeast Asia declined although Thailand rose after its central bank unexpectedly cut the benchmark lending rate.
ENERGY: Benchmark U.S. crude rose, climbing 25 cents to $48.55 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.71 to close at $48.29 a barrel on Tuesday. Brent crude, a benchmark for international oils used by many U.S. refineries, rose 11 cents to $56.98 in London.
CURRENCIES: The dollar strengthened to 121.37 yen from 120.99 yen in the previous session. The euro weakened to $1.0654 from $1.0701.