Asia market trends Tuesday: China concerns may continue to weigh shares

Singapore subway MRT escalator at One North; taken August 2018.Singapore MRT escalator at One North.

Asian markets are expected to open on Tuesday with negative leads, as Wall Street and oil prices fell, weighed by fresh concerns over slowing economic growth in China.

On Monday, markets fell after China trade data showed exports and imports unexpectedly fell in December, offering further signs the mainland’s economy — one of the world’s growth engines — is slowing. December exports fell 4.4 percent on-year, while imports dropped 7.6 percent, the biggest drop since 2016, compared with forecasts for 3 percent growth in exports and 5 percent growth in imports, Reuters reported.

Some analysts pointed to reasons that the data may be less indicative of a slowdown than it first appeared.

Scotiabank said on Monday that there were “strong caveats” to the headline figures, pointing to a “front-running” effect from the U.S. trade war.

“Exports had accelerated over the prior months up to October in order to front-run U.S. tariffs and now we’re in the resulting vacuum. In fact, the preceding several months had witnessed the strongest levels of exports to the U.S. on record,” Scotiabank said in a note. “Therefore, part of the export softening is due to shaking out this effect, after which there will be a cleaner reading on export growth net of front-running.”

Offsetting some of the gloom, earnings from Citigroup, the first of the major U.S. banks to report results, on Monday also beat some estimates and its shares rallied, which could help to bolster sentiment.

Indexes

March futures for the Nikkei 225 index were up 25 points at 20,155 at 7:24 A.M. SGT, according to CME data;  that compares with the index’s close at 20,359.70, up 0.97 percent, on Friday. Japan’s markets were closed on Monday for a holiday.

Singapore’s Straits Times Index was down 0.79 percent at 3173.46 on Monday; January futures for the index were at 3172 on Monday, while February and March futures were at 3175 and 3173 respectively.

Hong Kong’s Hang Seng Index shed 1.38 percent to 26,298.33 on Monday, while China’s CSI 300 fell 0.87 percent to 4762.75.

Malaysia’s KLCI ended Monday down 0.42 percent at 1676.16, while Indonesia’s IDX Composite fell 0.40 percent to 6336.12.

The Dow Jones Industrial Average fell 0.36 percent to 23,909.84, the Nasdaq Composite shed 0.94 percent to 6905.916 and the S&P 500 lost 0.53 percent to 2582.61. Futures for the three indexes were flat in early trade.

Oil

Nymex WTI crude oil futures for February were up 0.40 percent at US$50.71 a barrel at 7:12 A.M. SGT, while ICE Brent crude futures for March were down 2.46 percent at US$58.99 a barre at 6:51 A.M. SGT, according to Bloomberg data.

 

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