Asian markets slump on weak Chinese economic data

Asian stocks fell sharply overnight and the dollar stepped back from its recent highs as surprisingly weak Chinese trade data rattled investors already on edge over the crisis in Ukraine.

European shares were seen opening largely flat with the poor Chinese data tempering optimism from a robust US nonfarm payrolls report. Financial spreadbetters predicted Britain’s FTSE 100 would open as much as 0.06 per cent higher, Germany’s DAX up 0.13 per cent and France’s CAC 40 add as much as 0.18 per cent.

Investors greeted the new week in Asia on a cautious note after data issued on Saturday showed China’s exports unexpectedly tumbled in February, swinging the trade balance into deficit and adding to fears of a slowdown in the world’s second-largest economy. The soft Chinese data put a damper on risk sentiment, which had been temporarily boosted by stronger-than-expected US nonfarm payrolls out on Friday showing employers had added 175,000 jobs to their payrolls last month, up from 129,000 new positions in January.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 1.4 per cent, and Tokyo’s Nikkei stock average shed 1.0 per cent, retreating from Friday’s six-week high. China’s CSI300 index slid to its lowest in nearly nine months, and Hong Kong’s Hang Seng Index shed 1.8 per cent. US stock futures fell 0.4 percent from their record closing high on Friday.

“Fundamentally speaking, data out of the US has a bigger underlying market impact, but the psychological effect from Chinese economic indicators cannot be overlooked. The Nikkei’s attempt to chase further highs being derailed is a prime example,” said Koji Fukaya, president at FPG Securities in Tokyo. “The rise in yields after the upbeat US data supports the dollar, but latest indicators out of China dampens risk appetite and may foil the currency’s advances against the yen,” Fukaya said.

The US dollar index, a composite of six currency pairs dipped 0.1 per cent to 79.683 after touching a high of 79.847 on Friday after the US jobs data. Against the safe haven yen the dollar stood at 103.12, pulling away from a six-week high of 103.77 hit on Friday. The euro remained near recent highs, with bulls still heartened by the European Central Bank’s reluctance last week to take further policy action. The single currency traded at $1.3879, within striking distance of a 2-1/2 year peak of $1.3915 reached on Friday.

China’s yuan opened trade at 6.1554 per dollar on Monday, down 0.5 per cent from Friday’s close of 6.1260, before moving to 6.1451. The yuan as well as Chinese short-term rates fell amid expectations Beijing is quietly easing monetary policy to buttress wobbly economic growth.

Gold edged lower for a second straight session on Monday after the strong US jobs data eased fears of an economic slowdown and dimmed the metal’s safe-haven appeal.

In wake of disappointing Chinese data, Brent crude declined 55 cents to $108.45 a barrel, ending two straight days of gains. Geopolitical tensions in Ukraine and Libya limited the falls.

Reuters