Asian markets sink as US data fails to temper virus woes

accreditation
0:00
play article
Subscribers can listen to this article
Financial stock exchange market display screen board on the street
Financial stock exchange market display screen board on the street

Asian markets sank Wednesday as a slowdown in US consumer inflation failed to overcome concerns about the fast-spreading Delta variant, while Hong Kong was dragged by a collapse in casino firms as Macau unveiled a planned crackdown on the sector.

After a bright start to the month, equities around the world have gone into reverse in recent sessions as confidence is shaken by the virus with a number of countries seeing a worrying jump in new cases that have forced some, including China, to reimpose tough containment measures.

Investors are also having to grapple with a range of other issues including Federal Reserve plans to taper monetary policy, China's regulatory crackdown on private enterprises and a possible default by Chinese property giant Evergrande, which is teetering under debts of more than $300 billion.

Data Tuesday showing US consumer prices rose last month at a slower pace than expected soothed concerns that inflation could force the Fed to begin winding down its market-supporting policies earlier than thought.

The reading had taken on particular importance after producer prices -- what firms pay at the factory gate -- hit a record high in August owing to rising demand and tighter supplies.

The figures showed a slight dip, appearing to back up Fed officials' insistence that the sharp rises were temporary because of the reopening and short-term supply issues.

But US investors shrugged at the news and sent all three main indexes into the red.

Analysts pointed out that the easing came on the back of concerns about the spread of the Delta variant, which is sending infection rates surging. That led to a sharp drop in airline fares, while used car sales - a major cause of recent inflation spikes - also fell.

However, National Australia Bank's Rodrigo Catril said: "There are still many factors suggesting inflation is unlikely to ease significantly. Inflation remains strong for food, housing and other goods.

"The decline in airline fares and hotel room rates are likely to reverse as the Delta wave fades."

Casinos plunge 

While noting that the print would ease pressure on the Fed to tighten policy, he added that "debate on higher US inflation has not gone away and next year the big focus will be to what extent the expected rise in wages will deliver longer-lasting upward pressure on prices".

A taper in November or December still looked likely, he said.

And Dana D'Auria, of Envestnet Inc, told Bloomberg Television: "It is hard to argue at this point that (inflation) remains entirely transitory.

"You couple that with the fact that there are still all these supply shocks that we are still working through. I think the markets are going to have to feel the pain."

Asian markets were under pressure, with below-par retail sales data further indicating China's economy continued to slow in August.

Hong Kong led losses, with Macau casino operators collapsing as they became the latest to fall into China's regulatory crosshairs.

On Wednesday, the Macau government unveiled plans to tighten control over the industry, with recommendations including reviewing the number of concessions it issues, putting representatives on the boards of operators and criminalising underground banking in the industry.

Sands China tanked 30 percent, Wynn Macau and MGM China lost 27 percent each, Galaxy Entertainment was off 19 percent, while SJM Holdingas and Melco dived 20 percent.

The news comes as the firms were already struggling owing to the impact of the coronavirus on tourism to the city, which usually rakes in more money in a single week than Las Vegas makes in a month.

Tokyo, Shanghai, Singapore, Sydney, Wellington, Manila, Taipei and Jakarta all fell, though Seoul, Bangkok and Mumbai managed gains.

London opened flat as data showed UK inflation spiked at a nine-year high last month. Paris and Frankfurt edged up.

Meanwhile, observers said the selling in September was not much of a surprise.

"September is the only month in the calendar year with historically negative returns if you look back 50 years or more," said markets strategist Louis Navellier.

"That's not a guarantee, as some Septembers have been great, but the long-term trend suggests that we should be on the lookout for sell-offs in Septembers."

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
15.11
-1.1%
Rand - Pound
20.46
+0.2%
Rand - Euro
17.66
-0.9%
Rand - Aus dollar
10.94
-0.4%
Rand - Yen
0.14
-0.6%
Gold
1,733.75
-0.9%
Silver
22.44
-0.8%
Palladium
1,878.68
-4.6%
Platinum
966.87
-1.7%
Brent Crude
79.53
+1.8%
Top 40
57,462
-0.6%
All Share
63,784
-0.6%
Resource 10
56,880
-1.5%
Industrial 25
82,305
-0.7%
Financial 15
14,437
+1.3%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
What potential restrictions on unvaccinated South Africans may make the biggest difference to public health, the economy?
Please select an option Oops! Something went wrong, please try again later.
Results
Limited access to restaurants and bars
11% - 162 votes
Limited access to shopping centres
14% - 208 votes
Limited access to live events, including sport matches and festivals
27% - 389 votes
Workplace vaccine mandates
47% - 683 votes
Vote