Markets started the new year with decreases, suffering from the US-China trade war, as well as the global economic slowdown. The red wave spread from Asia to Europe and expected to extend to Wall Street.
Global stock markets have taken investors on a roller coaster ride in recent weeks. The sharp volatility has shaken investors, who have flocked to safe-assets such as gold and the Japanese yen at the expense of equities.
The ongoing global trade war has dampened economic growth and hurt investor confidence. With investors reading in their morning newspapers that equity markets suffered their worst year since 2008, risk apprehension remains high as we begin the New Year.
Asian markets recap
The indexes of the major Asian stock exchanges ended the first session in 2019 with declines, with Hong Kong’s index Hang Seng wiping out nearly 750 points.
The focus of the investors was the published economic data on the slowdown in manufacturing activity in Asia, which was caused by the negative impact of the trade war between Beijing and Washington.
On this background, the continental index Shanghai Composite declined by 1.15% to 2,465.29 points.
The analysts predict that, due to the negative performance of the region’s production activity, the Asian central banks will suspend their policy of raising key interest rates for a while.
Many indicators measuring trade activity in December slowed down or declined, and Caixin / Markit PMI Index declined for the first time in 19 months, according to an official study released on Monday this week.
The poor results are not limited to China, but also cover other areas in Asia.
The production activity in Malaysia has slowed down to its slowest pace since 2012.
For Taiwan, the decline has been the most significant for the past 4 years.
Meanwhile, the official economic data from Singapore shows that the country’s gross domestic product has grown at a slower pace than forecast in the fourth quarter due to a slowdown in the local production sector’s activity on a quarterly basis.
Hong Kong’s index Hang Seng fell by 749.73 points, or 2.90%, ending the day at 25,095.97 points, while the technology company Tencent reported a 2.4% drop in stock.
In South Korea, the Kospi index wiped out 1.52% of its value by closing the session at the 2010 level.
The Japanese stock exchange was closed today.
In Australia, S&P ASX 200 declined by 1.57% to 5,557.80 points. The shares of Australia and New Zealand Banking Group and Commonwealth Bank of Australia declined by 2.45% and 1.96% respectively, while the shares of Westpac and National Australia Bank declined by 2.24% and 1.83%.
The investors have warned that this year’s trends of the volatility may continue.
European market mid-session recap
European markets have started 2019 with losses. On the release front, Germany and the Eurozone posted manufacturing PMIs, with readings of 51.5 and 51.4, respectively. Both readings matched the forecast.
The German index DAX 30 is down slightly in the Wednesday session, recovering the earlier loses. At 12:10 GMT, the index is trading at 10.555,22 points, which is less than 0.1% below the starting levels.
French stocks started the New Year deep in the red on Wednesday as growth worries intensified and the US government shutdown entered its 12th day with no signs of a workable plan. The index CAC 40 is trading with a decrease of 1.41% to 4,663.96 points at mid-session. The banks and automakers paced the declines, with Renault, Peugeot, BNP Paribas, Credit Agricole, and Societe Generale all falling around 3%.
The British index FTSE 100 opened sharply lower on the first day of trading in 2019 extending last year’s losses, as weaker than expected economic data from China crippled Asian markets. London’s leading stock index fell more than 100 points, or 1.6%, to 6,620.71 on Wednesday morning. However, during the trading recovered some of the loses and climbed to 6,694.26 points, but will report a decrease of 0.5%.
Wall Street pre-session recap
all Street index futures fell sharply on Wednesday, the first trading day of the new year, as disappointing economic data from China hampered global risk appetite.
At around 07:25 a.m. ET on Wednesday, Dow Jones Industrial Average futures pointed to a drop of 294.46 points at the open. Futures on the S&P 500 and Nasdaq 100 also pointed to a weak open, decreasing by 30.80 points and 122.71 points.
Wall Street ended trading in 2018 on Monday, with all major stock indexes registering their worst yearly performances since the financial crisis.