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Chinese stocks fall again, other Asian markets rise China weighs on global markets ahead of Fed statement
(about 4 hours later)
BEIJING — Chinese stocks sank again Wednesday while other Asian markets rose and Europe retreated as investors looked ahead to the U.S. Federal Reserve’s latest statement on interest rates and the economic outlook. LONDON — Another big reverse on China’s main stock index weighed on markets around the world Wednesday ahead of the latest policy statement from the U.S. Federal Reserve.
KEEPING SCORE: In early trading, France’s CAC-40 shed 0.5 percent to 4,336.04 and Germany’s DAX lost 0.6 percent to 9,760.41. Britain’s FTSE 100 fell 0.4 percent to 5,885.47. Wall Street look set to reverse Monday’s gains. Dow futures were off 0.7 percent at 15,960.00 and S&P 500 futures dropped 0.8 percent to 1,880.70. KEEPING SCORE: In Europe, France’s CAC-40 was down 0.6 percent at 4,333 while Germany’s DAX fell 0.6 percent to 9,762. Britain’s FTSE 100 was 0.4 percent lower at 5,889. Wall Street look set for a down-opening with Dow futures and the broader S&P 500 0.6 percent lower.
FED PLANS: Investors were watching Wednesday’s Fed statement for signs of the pace of possible future rate hikes. The U.S. central bank raised rates last month for the first time since the 2008 global crisis, citing improved inflation and other data. But the strength of the dollar, low oil prices and jitters over China’s outlook have prompted warnings against raising rates too fast. FED PLANS: How the U.S. markets actually fare could well hinge on the statement from the Fed following the conclusion of its latest meeting. The U.S. central bank raised rates last month for the first time in nearly a decade following a raft of upbeat economic data, notably with regard to jobs. But the recent strength of the dollar, low oil prices and jitters over China’s outlook have prompted warnings against raising rates too fast.
ANALYST’S QUOTE: Fed officials will probably want to acknowledge the uncertainty raised by financial and international developments, said Jim O’Sullivan of High Frequency Economics in a report. “But they will likely also want to avoid encouraging the perception that a relatively modest bout of risk aversion in markets or mixed signals from the data will promptly change their outlook in a major way.” ANALYST TAKE: “Fed-watchers will be examining the statement for signs of a shift in tone that might confirm the markets’ recent lowering of expectations of the trajectory of U.S. rate increases during the course of 2016,” said Neil MacKinnon, global macro strategist at VTB Capital.
ASIA’S DAY: The Shanghai Composite Index fell 4 percent by midday before recovering to end down 0.5 percent at 2,735.56, adding to Tuesday’s 6.4 percent loss. The Chinese benchmark has given up almost all gains made since December 2014. Japan’s Nikkei 225 rose 2.7 percent to 17,163.92 and Hong Kong’s Hang Seng was up 1 percent at 19,052.45. South Korea’s Kospi gained 1.4 percent to 1,897.87 and India’s Sensex advanced 0.2 percent to 24,544.05. Markets in Taiwan and Southeast Asia also gained. Australia’s S&P/ ASX 200 lost 1.2 percent to 4,946.40. CURRENCIES: The foreign exchange markets could well see the biggest moves after the Fed’s statement. Ahead of it, trading was subdued, with the euro up 0.1 percent at $1.0874 and the dollar flat at 118.33 yen.
ENERGY: Benchmark U.S. crude shed 80 cents to $30.65 per barrel in electronic trading on the New York Mercantile Exchange. The contract soared $1.11 on Tuesday to close at $31.45. Brent crude, the benchmark for international oils, fell 68 cents to $31.12 per barrel in London. It jumped $1.30 on Tuesday to $31.80. APPLE DISAPPOINTS: Investors in the U.S. have something else to ponder — whether Apple’s boom years may be coming to an end. The company said Tuesday that its revenue could fall at least 8.6 percent during the January-March quarter, compared with a year earlier. Analysts say the latest iPhone models are not providing the boost Apple needs to match the massive sales growth it enjoyed last year. Apple counts on the iPhone for two-thirds of its revenue.
CURRENCIES: The dollar weakened to 118.15 yen from Tuesday’s 118.31 yen. The euro fell to $1.0857 from $1.0864. THE QUOTE: “Innovation is the way Apple has always been one step ahead of the game, and they now need that innovation to grow sales figures and keep them on the leading edge of the market,” said James Hughes, chief market analyst at GKFX.
ASIA’S DAY: The Shanghai Composite Index fell 4 percent by midday before recovering to end down 0.5 percent at 2,735.56, adding to Tuesday’s 6.4 percent loss. Japan’s Nikkei 225 rose 2.7 percent to 17,163.92 and Hong Kong’s Hang Seng was up 1 percent at 19,052.45. South Korea’s Kospi gained 1.4 percent to 1,897.87.
ENERGY: Oil prices were sliding again, more or less reversing the previous day’s gains. Benchmark U.S. crude was down $1.06 at $30.39 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the benchmark for international oils, fell 60 cents to $31.20 per barrel in London.
Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.