Asian stocks diverged as the Chinese market rallied, while Japanese equities slumped on their first trading day of the year as investors caught up with a slew of negative news ranging from Apple’s sales outlook cut to weak economic data.
Stocks across Asia started on a weaker tone on Friday, following declines in New York on Thursday. The S&P 500 slid 2.5 per cent in its steepest sell-off since Christmas Eve as Apple tumbled after citing an unforeseen slowdown in China.
S&P 500 is an American stock market index based on the market capitalisations of 500 large companies having common stock listed on the New York Stock Exchange.
However, concern over China-US trade tensions eased little bit as vice ministers from the two countries prepare to hold talks starting Monday. The Shanghai Composite Index climbed 1.8 per cent. News that the US House passed a spending-bill package in an effort to end a partial government shutdown also helped sentiment, sending S&P 500 Index futures little higher.
Japanese yen, seen as a haven trade, slipped further. While stocks pared losses in Japan, they were still well in the red as traders returned from an extended New Year’s break.
“I wouldn’t be surprised if we get better communication on trade,” said Stefan Hofer, chief investment strategist at LGT Bank. Still, “we have beginning-of-the-year jitters, low levels of liquidity and exaggerated swings, which feed people’s worst fears - which I simply can’t sign up to at the moment.”
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Read more:
A perfect storm for Apple’s downward outlook, experts say
Investors need to look out for 'doom loop' risks ahead
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In Japan, Apple suppliers Sharp and Kyocera slumped as they caught up with declines in global peers after the iPhone maker trimmed its sales outlook. Technology shares dropped the most among MSCI Asia Pacific Index’s industry groups, while energy and utility companies climbed.
But optimism for a resolution to the US government shutdown and over trade talks eases two of the major overhangs that have dogged markets. The year kicked off with renewed anxiety over global growth following poor data from China and Europe.
Elsewhere, oil built on this week’s gains, heading for its biggest weekly gain since September. Traders weighed signs that Organisation of the Petroleum Exporting Countries (OPEC) is following through on production cuts against hints of an economic slowdown.
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
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Company%20profile
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More on Quran memorisation:
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
BELGIUM%20SQUAD
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Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
Bloomberg
The specs: 2018 Alfa Romeo Stelvio
Price, base: Dh198,300
Engine: 2.0L in-line four-cylinder
Transmission: Eight-speed automatic
Power: 280hp @ 5,250rpm
Torque: 400Nm @ 2,250rpm
Fuel economy, combined: 7L / 100km
