- Tuesday, 15 September 2015
- Written by Redactor
Concerns over China kept financial markets on edge on Tuesday, with an underwhelmed reaction to recent data and Beijing's efforts at corporate reform pushing Asian stocks lower and keeping any gains in Europe minimal.
Wall Street was set to open flat 1YMc1 NQc1, with investors avoiding firmer bets ahead of the first meeting of the U.S. Federal Reserve in years at which a possible rise in interest rates has been a live issue.
But worries about the impact of any Fed hike on dollar borrowers across the developing world, and its effect on growth, continued to dominate, with Shanghai stocks falling another 3.5 percent .SSEC and Brent crude around $46 a barrel.
"It's all about caution today," said Andy Sullivan, a portfolio manager with Swiss investment firm GL Financial Group. "There is concern about the Fed, plus the China data continuing to be weak."
While Tokyo inched higher, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS erased early gains to fall 0.7 percent. Indices in Frankfurt and Paris were marginally higher .GDAXI .FCHI while London's main FTSE 100 index fell 0.1 percent .FTSE.
Concerns around emerging economies have dominated the past month, but there are still reasons to be more bullish on a number of developed markets.
Sullivan said he was positive on European equities, which will draw support from the European Central Bank's campaign of quantitative easing over the next year and look undervalued compared to their U.S. peers.
In Britain, while this year's moves in oil returned headline inflation to zero, there was nothing in those numbers to further undermine expectations that the Bank of England will follow the Federal Reserve in raising interest rates next year. GBP= EURGBP=.
The Australian dollar, often a proxy for China on major currency markets, was a touch lower, while iron ore and copper prices -- also often guided by Chinese demand -- recovered from losses in Asian time to be roughly steady on the day.
A Barclays survey showed growth in China and other emerging markets was now the top concern for almost half of investors worldwide over the next year. Less than 10 percent saw Chinese assets as cheap, suggesting the sell-off has further to go.
"Investors believe overcapacity is China's main economic problem and most see meaningful structural reforms as necessary before they could feel more confident about prospects," Barclays analysts said in a report.
The yen JPY=, traditionally investors' safe haven of choice in times of turbulence, rose 0.6 percent, building on gains after the Bank of Japan held policy steady at the end of its two-day meeting.
The euro gave up about 0.5 percent to 135.39 yen EURJPY=, while it was flat against the dollar at $1.1323 EUR=.