Market Watch: Asia Stocks Decline; Oil Recovers
- Asia shares on Monday dropped as the demand in China weakened.
- Saudi Arabia’s plans of cutting the production stopped a drop in oil prices.
- Alibaba was uncertain in the outlook of China.
MARKET WATCH – On Monday, Asia shares declined amid the emergence of weakening demand in China. The softening demand of China sparked worries regarding the outlook for world growth. However, the plans of Saudi Arabia to trim the production held back a drop in oil prices.
Asia-Pacific’s MSCI’s broadest index outside Japan declined 0.07%, cutting earlier losses on the recovery of Chinese shares. However, it had difficulty to enter into positive territory. There was a 0.13% gain in the Australian shares. Meanwhile, the Nikkei stock index of Japan increased 0.11%.
On Friday, there was a combination of China’s soft factory-gate inflation data and low oil prices weighed on global stocks. Consequently, this pulled the MSCI’s gauge of global stocks to its worst day in two weeks. The index recorded a 0.09% lower.
Meanwhile, Kevin Lai is the chief economist for Asia ex-Japan at Daiwa Capital Markets. According to Lai, there were genuine worries regarding the economic growth of China in general. Aside from this, Lai added that there are also concerns in China’s significant debt burden in particular.
“There’s no way the economy can really get back on a nice recovery path unless they can seriously compress the debt significantly … all this deleveraging we’ve been talking about hasn’t really delivered any results,” Lai said.
Market Watch: Alibaba ‘uncertain’ in China’s outlook
Alibaba also expressed uncertainty in China’s outlook. The e-commerce giant recorded its slowest-ever annual growth in sales for the yearly “Singles’ Day” event.
Alibaba’s sales outlook softened on the escalating US-China trade war which impacted the economy of China.
An index tracking consumer staples firms in China declined 0.95%. Further, the blue-chip CSI300 index recovered from the string of losses last week and gained 0.68%.
The commitment of the Federal Reserve in maintaining to raise borrowing costs caused a spike in the US bond yields. The US bond yields’ spike upset emerging markets amid the shifting of investors into US dollar assets.
On Friday, the Dow Jones Industrial Average declined 0.77%. The S&P also made a 0.92% loss and the Nasdaq Composite declined 1.65%.
The yield on benchmark U.S. 10-year Treasury bonds traded at 3.189% on Friday. Meanwhile, the decline in Wall Street followed as the US Federal Reserve kept the rate on hold.
The stand of the Fed inflicted disappointment to a few investors. These investors hoped that the October’s rout in equities might encourage a more cautious method on interest rates.