Asia markets fall again as Tokyo gets 2019 off to nightmare start

Hong Kong, China | AFP | Friday 1/4/2019 – There was no respite for Asian investors Friday as most regional markets suffered more losses with Tokyo tanking three percent and technology firms taking another hiding after Apple’s shock revenue warning.

The new year has proved so far to be anything but happy on trading floors as dealers face a confluence of issues including the China-US trade war, China’s stuttering economy, the US government shutdown and Brexit.

Apple has been the source of angst this week after it slashed its revenue forecasts blaming weak Chinese demand for its iPhones, and citing the tariffs spat between Washington and Beijing.

The US tech titan plunged 10 percent Wednesday – wiping US$ 75 billion off its value – in response to the announcement and analysts said the fact such a usually safe firm was feeling the pinch was a sign of deeper problems in the global economy.

Technology firms particularly those linked to Apple were among the worst hit in Asia Friday. In Tokyo, which was returning from a four day break, supplier Kyocera fell 3.3 percent, Japan Display was 1.4 percent off and Sharp dived 4.2 percent while Alps Alpine shed 5.8 percent.

Sony was also more than four percent lower. There were also hefty losses for AAC technologies in Hong Kong and Foxconn in Taipei, which had already been badly hit Thursday.

“Belief in global corporate earnings is fading against the backdrop of the US-China trade friction,” Nobuhiko Kuramochi, head of investment information at Mizuho Securities in Tokyo, told Bloomberg News.

“Deteriorating Apple earnings will lead to volume cuts for suppliers… while it could also mean cost cutting pressures.”

Tokyo’s Nikkei 225 index ended the morning down 3.0 percent.

Shanghai shed 0.2 percent and Sydney was one percent lower, while Seoul dropped 0.1 percent and Taipei sank 1.3 percent. There were also losses in Wellington and Jakarta. However, Hong Kong added 0.1 percent and Singapore edged up 0.3 percent.

The losses follow sharp falls on Wall Street where the tech rich Nasdaq lost three percent and the Dow 2.8 percent with the US government shutdown showing no sign of ending while investors were also jolted by weak manufacturing data.

Investors will be keeping tabs on developments in the China-US trade standoff with the two sides less than two months short of a deadline to hammer out a deal before Washington jacks up tariffs on a slew of Chinese goods.

Beijing said Friday that a US delegation would visit China at the start of next week for the first face-to-face talks since Donald Trump and his Chinese counterpart Xi Jinping agreed a ceasefire.

Word of the meeting follows small signs of progress – and the absence of new threats from Trump – while the two sides work to ease trade tensions by 1 March.

However, there remains little hope the world’s top two economies will be able to bring an end anytime soon to their debilitating spat, which hammered global markets for most of 2018.

Most immediately, attention is on the release later in the day of key US jobs data for December, which will give another snapshot of the economy, with a strong reading likely to put pressure on the Federal Reserve to press on with its interest rate hikes.

The prospect of borrowing costs getting more expensive was another factor helping drive down equities last year.

On currency markets, the dollar edged back against the yen after Thursday’s flash crash but the greenback was down against most other high yielding and emerging market units including the South Korean Won, South African Rand and Indonesian Rupiah.

It was also down against the Australian Dollar, a day after hitting a 10 year high.