Hong Kong: Asian shares fell on Thursday after rising for two days, on deepening concerns about US consumer demand, while the euro steadied and sterling dipped ahead of rate verdict from central banks.
Glum profit forecasts from US consumer companies such as Kraft bode badly for export-dependant countries, though Asian shares had briefly gained earlier on hopes for a recovery in China’s economy.
European shares were set to fall as well on Thursday, while investors also shifted towards assets seen as safer such as Japanese government bonds. Oil and gold prices were range bound.
“Continued weakness in corporate results and economic data, particularly from the United States, is weighing on sentiment,” said Kim Joong-hyun, a market analyst at Goodmorning Shinhan Securities in Seoul.
The MSCI index of Asia-Pacific stocks outside Japan fell 0.4% as of 10:45am after gaining 2.4% over the previous two sessions.
Japan’s Nikkei average fell 1.1% after a volatile session.
An avalanche of negative news, sprinkled with an occasional hopeful signal, has been the norm this year as investors come to terms with a deteriorating global economy and persistent woes in the vital financial sector.
Strong US consumer spending had been the lynchpin for the global economy in previous years, but has now become the drag helping push the world’s major engines of growth into recession.
Food makers Kraft Foods Inc and Sara Lee Corp have cut their profit forecasts for the year, latest signs of the problems hitting the world’s largest economy.
Still, some investors are pinning hopes that a surge in government spending in China and elsewhere could prevent the downturn from worsening.
Chinese manufacturing data on Wednesday was also not as bad as some in the market had expected, helping bolster sentiment.
Shares in South Korea and India fell more than 1% each, while indexes in Shanghai, Taiwan, Singapore, and Australia dipped slightly. Hong Kong shares rose.
China is not the only one taking steps to revive growth, with governments globally cutting taxes and bailing out banks or even industrial sectors, in addition to their spending plans.
Central banks are cutting rates aggressively in a bid to revive growth. The Bank of England on Thursday was expected to lower already record low interest rates by at least another 50 basis points to 1%.
The European Central Bank, however, is expected to keep its rates on hold for now at 2% after four months of cuts.
Oil prices were flat at $40.36 a barrel, after starting Asian trade with falls sparked by data on Wednesday showing a rise in US crude inventories.
Gold traded range-bound at $904.30, steadying after rising on safe-haven buying the previous day. Analysts at Goldman Sachs said gold’s safe-haven appeal remained intact, with prices seen rising to $1,000 an ounce in the next three months.