The immediate spark was Glencore, whose shares plunged nearly 30 per cent to a record low in London on Monday on concerns over the firm’s debt amid an ongoing collapse in global metal prices. UBS Group AG lowered its target for Hong Kong’s benchmark stock gauge by 25 per cent this month, saying its worst-case scenario for the city is coming true as the economy weakens and tourism arrivals decline.
At home, the losses were led by local commodity stocks, which suffered huge collateral damage following the pummelling of mining and commodity trading giant Glencore.
Two factors that have pressured markets-signs of a deteriorating Chinese economy and the uncertain timing of a rise in USA interest rates-have sparked selling in recent weeks.
Andrew Gillan, Singapore-based head of Asian equities excluding Japan at Henderson Global Investors, which oversees about $130 billion. “The world economy is soft in places and there are risks out there”. Year to date, the CAC-40 is up 4.2%.
Among the actives, Xinjiang Tiany, Ningbo Marine, Shanghai STEP Electric, Shenzhen Hepalink Pharmaceutical and Shenzhen Yan Tian Port Holdings all tumbled by the 10 percent daily limit, while Inspur Software dropped 6.11 percent and New China Insurance fell 4.58 percent. Contracts on the Dow Jones Industrial Average and the Nasdaq 100 Index lost 0.1%, after earlier rising as much as 0.3%. MSCI’s all-country index of world shares lost 0.5 percent, touching its lowest since September 2013. A Bloomberg index of commodity futures has fallen 50 per cent since a 2011 high. The ASX remains up 3.1% this year. The figure was 685 basis points more than Treasury yields, which was the widest spread in more than three years.
The Kospi index fluctuated in Seoul as markets in South Korea traded for the first time this week.
The euro was up 0.1 per cent at US$1.1249.
Rates on Treasuries due in a decade were down one basis point to 2.08% after sinking seven basis points last session.
The United States dollar was down 0.2 per cent against a basket of major currencies and down a similar amount at ¥119.70.
The yen advanced slightly against the dollar, gaining 0.07%.
There have been mixed messages from Fed officials on whether it will hike interest rates before the end of 2015. His company has also added 1,000 retail stores in the country in the past two years. Copper last traded at $4,979, within reach of a 6 1/2-year low below $4,855.
Hong Kong’s markets were shut on Monday, when the Chinese government released data showing industrial companies’ profits dropping 8.8 per cent last month.