quora Asian Stocks Plunged on Recession Fears

Asian Stocks Plunged on Recession Fears

The Asian stocks in early Wednesday fell following a weak U.S. economic data, which fueled global recession fears. It also continued to soured investor sentiment that was already damaged by intensified trade war concerns.

Aside from that, safe-haven government bonds fared well in the wake of risk aversion in the broader markets. The benchmark U.S. Treasury yield reached its lowest level in three years.

Then, the U.S. manufacturing sector contracted in August for the first time since 2016. And it was due to concerns regarding a weak global economy and the increasing trade tensions of the United States and China.

Now, going to Asian stocks, the MSCI’s broadest index of Asia-Pacific shares outside Japan edged lower after dropping 0.85% the previous day. Japan’s Nikkei slid by 0.3%.

Similarly, Australian stocks fell 0.8%.

Senior strategist Masahiro Ichikawa stated, “There isn’t much going for the equity market following the weak U.S ISM reading. And with U.S.-China trade talks seemingly bogging down.”

Ichikawa also said that the markets would be pressuring the Fed for more even though the September rate cut priced in as the decline in U.S. yields continues to show.

In addition to that, traders have nearly fully priced in a 25 basis-point interest rate cut during the policy meeting of the Fed on September 17 and 18. Also, expectations for another 25 basis-point reductions implemented on October meeting increased from 53% to 61% over the past month.

Global Stocks

Meanwhile, away from Asian stocks, usually, a decline in the U.S. yields weighs on the dollar. However, the greenback became slightly underpinned by increasing safe-haven demand. And this was due to the fears of a possible chaotic British exit from the European Union. But that chance later decreased with a setback in parliament late Tuesday for British Prime Minister Boris Johnson.


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