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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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.
