The major Asia Pacific stock index plunged on Thursday, following Wall Street’s lead on Wednesday. The weakness was led by more than 2% declines in Japan and Australia. Renewed concerns over tariffs were the catalysts behind the selling pressure after the U.S. announced it was poised to slap additional tariffs on European Union goods.
On Thursday, Japan’s Nikkei 225 Index settled at 21341.74, down 436.87 or -2.01%. Hong Kong’s Hang Seng Index bucked the trend with a close at 26110.31, up 57.62 or +0.26%. Australia’s S&P/ASX 200 Index settled at 6493.00, down 146.90 or -2.21%.
The markets in South Korea and China were closed.
Hong Kong Markets Rebound
Shares in Hong Kong bucked the trend in Asia on Thursday, recovering from a steep sell-off to close higher for the session.
Earlier in the session, shares fell in reaction to yesterday’s bearish retail sales report for August, and the news of the new U.S. tariffs on Europe.
Stocks turned around late today to finish higher amid local media reports that authorities in the city are set to ban face masks at rallies through and emergency law.
The Hang Seng Index jumped to a one week high on Thursday after the news broke. For much of the day, the benchmark index was down along with other Asian markets until local broadcasters TVB and Cable TV said the Hong Kong government was set to ban face masks at public rallies in a bid to ease months of unrest.
Early Selling Fueled by Worries over U.S. Economy
Sellers came in early in Asia with traders using the plunge in the major U.S. indexes on Wednesday as their guidelines, amid worries over the prospect of an economic slowdown in the U.S. The selling pressure actually began on Tuesday after a report showed U.S. manufacturing activity contracted to its worst level in more than a decade, according to a report from the Institute for Supply Management (ISM).
The pressure accelerated on Wednesday after a September private payrolls report also showed a slowdown in the pace of U.S. hiring. This raised concerns that Friday’s U.S. Non-Farm Payrolls report will show a similar slowdown.
Traders are now pricing in another 25-basis point rate cut by the Federal Reserve at the end of the month. However, there is a growing number of analysts who are starting to believe that the rate cuts aren’t working to revitalize the economy and that the Fed is going to have to take a more aggressive approach in its effort to prevent the global economic weakness from hitting the U.S.
WTO Gives Trump Administration Right to Put Tariffs on Europe
The breaking story on Thursday is that the World Trade Organization (WTO) gave the Trump administration the right to put tariffs on $7.5 billion in European goods.
Stocks are being pressured because the action escalates conflicts the Trump administration has waged around the globe as it tries to get major trade partners to change their practices.
This article was originally posted on FX Empire
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