TOKYO (Reuters) – Asian stocks broke 20-month lows on Wednesday to make small profits, thanks to a recovery on Wall Street, despite investors losing after a harsh October month in which trillions of dollars lost in global equity markets , stayed careful.
FILE PHOTO: Visitors look at a Stock Market Stock Exchange at the Tokyo Stock Exchange in Tokyo, Japan, October 11, 2018. REUTERS / Issei Kato
A confluence of Sino-US factors has led tensions between the US and concerns about US corporate earnings to the end of light money in developing countries to financial market volatility in recent weeks.
Fears that global growth could quickly lose momentum were at the center of the market rallies. Wednesday's early Asian trade indicated that investor sentiment remains fragile.
The broadest index of the MSCI index for Asia-Pacific outside of Japan .MIAPJ0000PUS rose 0.05 percent, but was still around 11 percent this month.
The index fell to its lowest level since February 2017 on Monday as corporate profit worries weighed heavily on US equities.
Wall Street's three stock indexes rose more than 1 percent on Tuesday, helped by strong gains in chip and shipping stocks as investors took advantage of favorable prices following the recent sharp pullback in equities. [.N]
Australian equities rose 0.1%, South Korean KOSPI .KS11 0.35% and Japanese Nikkei .N225 0.5%.
"The recent decline in equities has been so strong that it has invited buyers such as the Japanese stock market," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.
The MSCI World index .MIWD00000PUS has lost about 8.50 percent of its value so far in October, winning just over $ 4.5 trillion in just one month. This is evident from an analysis by Kyle Rodda, an analyst at the IG in Melbourne.
Ichikawa of Sumitomo Mitsui Asset Management said the market outlook remains gloomy and that the US-China trade dispute will "probably remain a worrying factor even after the US midterm elections."
US President Donald Trump said in an interview with Fox News late Monday that he believes there may be an agreement with China on trade. But he also said he has new billions worth of dollars available if a deal is not possible.
In currencies, the dollar index was close to a basket of six major currencies near a 16-month high of 97.02. Scaled overnight after data showed US consumer confidence rose to an 18-year high in October, suggesting continued strong economic growth in the short term.
The dollar rose to a three-week high of JPY 113.20.
The yen's immediate focus was on the Bank of Japan's political decision, due later in the day.
Later on Wednesday, the BOJ will keep monetary policy steady and maintain its optimistic outlook on economic prospects, even as global trade disputes, fears of growth and volatile markets prevent them from achieving their elusive inflation target.
The euro was little changed at EUR 1,1346, having lost 0.25 percent the previous day. A drop below $ 1.1336 would bring the single currency to its lowest level since mid-August.
China's yuan was slightly weaker at offshore CNH = D4 at $ 6.9727 per dollar, close to the 21-month low of 6.9770 (Tuesday).
The yuan has been plagued by fears of slowing Chinese economic growth and a potential sharp escalation in the US-China trade war, which has dropped to its lowest level in a decade in onshore trading this week.
The oil price rebounded slightly after plummeting to a multi-month low the previous day, amid signs of rising supply and concerns that global economic growth and demand for fuel will fall victim to the US-China trade war. [O/R]
The US Crude Oil Futures Index CLc1 rose 0.46 percent to $ 66.49 a barrel, after falling to $ 65.33 on Tuesday, its lowest level since mid-August.
Additional reporting by Swati Pandey in Sydney; Processing of Sri Navaratnam