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The S&P 500 Index futures reversed an advance spurred by signs US President Donald Trump may be more willing to make a deal to end a Government shutdown.
Wednesday 02, January 2019
(Bloomberg)--Stocks in Asia fell with US futures and oil erased gains as evidence of slowing Chinese growth weighed on investors starting 2019 concerned about the world economy and reeling from the worst year for global equities since the financial crisis. The yen touched a six-month high.
Declines spread from Hong Kong to Sydney after a closely watched Chinese manufacturing gauge showed factory conditions slumping in December amid the prolonged US-China trade war. Equity markets in the US and Europe also look set to start the first trading day of the year in the red. The S&P 500 Index futures reversed an advance spurred by signs US President Donald Trump may be more willing to make a deal to end a Government shutdown. European futures fell.
Risk aversion returned after the S&P 500 ended the worst year for US stocks since 2008 with a narrow gain in thin pre-holiday trading Monday on optimism about a deal on trade between the US and China. Treasuries didn’t trade in Asia because of a holiday in Japan for most of this week.
Stocks around the world limped into the end of a dismal year that’s seen bear markets in equities from Japan to Germany. The MSCI Asia Pacific Index declined 16 per cent last year, the most since 2011. The S&P 500 had its worst December rout since 1931, ending the month down 9.2 per cent. That monthly rout capped a 6.2 per cent slide in the year, the biggest of the record bull market. The 10-year Treasury yield slid to 2.68 per cent, the lowest since February.
The Chinese manufacturing gauge had its lowest reading since May 2017, signaling a contraction as it fell below a reading of 50.
“The trend remains lower for now,” Kyle Rodda, an analyst at IG Group Holdings Plc, told Bloomberg Television. “We’ve had rate hikes from the Fed effectively priced out, so we are looking at a situation when markets are thinking that we are entering a period of slower growth.”
Elsewhere, crude oil added to its first annual loss since 2015. Gold was steady after entering 2019 near a six-month high on haven demand.