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Asian Markets Mixed Following Huge Fall in U.S. Stocks

By Alex Ho 

 

Investing.com - Asian markets were mixed on Tuesday morning as investors digested another huge fall in U.S. markets overnight.

Hong Kong’s Hang Seng Index led the losses Tuesday as it slid by 4.03% as markets opened, then cut the loss to 0.87% by  9:53 PM ET (1:53 GMT). China’s Shanghai Composite was down 0.47% after an initial loss of 3.4% and the Shenzhen Component recovered from a 5.33%, cutting it to 0.82%. Investors were still feeling the impact of the sharp falls in Chinese industrial production, retail sales and asset investment data for January and February released on Monday. The falls in all three categories were much greater than analyst predictions.  

 

In Japan, the Bank of Japan’s measures announced yesterday to double targets for annual purchases of exchange-traded funds to JPY12 trillion and keep interest rates unchanged were not enough to prevent an initial slide of 0.2% for the Nikkei 225, which then climbed to 0.17%. 

South Korea’s KOSPI is down by 1.95% and Australia’s ASX 200 gained 3.33%.   

 

Jim Paulsen, chief investment strategist at The Leuthold Group, stated in a note: “Although the contemporary crisis is loaded with bad news, this has not been its primary problem. It’s the ‘unknown’.” 

“Give me bad news any day over complete uncertainty,” he added. 

Overnight, central banks’ attempts to stave off recessions failed to prevent another big drop on Wall Street. It was the second time in a week that markets there recorded double digit percentage drops not seen since Black Monday in 1987. The  Dow 30 lost 12.93%, the S&P 500 lost 11.98% and the NASDAQ Composite was down by 12.32%. The sharp falls triggered a third circuit breaker in the past week. Even an announcement by the U.S. Federal Reserve that it would cut interest rates to nearly zero and a $700 billion stimulus on top of a $1.5 trillion injection announced last week failed to quell investor fears. 

The havoc caused by the COVID-19 novel coronavirus led to President Donald Trump stating that the U.S. “may be” heading into a recession. 

 

“You’ve never been in a scenario where you shut down the entire economy,” Steve Chiavarone, a portfolio manager at Federated Investors, told Bloomberg. “You get a sense in your stomach that we don’t know how to price this and that markets could fall more.” 

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