Asian stocks struggle on growth concerns, yen hits Japan stocks

HONG KONG: Asian stocks eased on Thursday after surveys showed global manufacturing activity and demand remain weak, while a jump in the yen sent Japan’s Nikkei reeling more than two per cent.

MSCI’s broadest index of AsiaPacific shares outside Japan struggled to keep its head above water after rising more than three per cent over the last seven days.

Shares were seen opening mixed in Europe with futures on the Euro STOXX 50, the French CAC and the German DAX all down by around 0.1 per cent, while futures on the British FTSE 100 were up by around 0.2 per cent.

Factory surveys over the past 24 hours highlighted a sluggish global economy, even as the US Federal Reserve appears to be preparing jittery financial markets for a possible interest rate hike in coming months.

The global economy is stuck in a “low growth trap”, the Organisation for Economic Co-operation and Development (OECD) said on Wednesday, urging governments to boost spending.

“Headline purchasing managers index (PMIs) were broadly disappointing,” Frederic Neumann, co-head of Asian economics at HSBC, said in a note.

“New orders point to little upside in the coming months. If anything, for most countries, it suggests an equally soggy summer.”

Japan’s Nikkei fell 2.3 per cent after the dollar sunk to a two-week low against the yen overnight following Japanese Prime Minister Shinzo Abe’s official announcement of a widely expected delay in a sales tax increase next year.

A spate of decent US economic data on Wednesday failed to lift Asian markets or reveal any fresh clues as to when the US Federal Reserve might opt to raise interest rates, after officials hinted such an increase could come as early as June.

Market turnover has trended lower in recent days as investors stayed on the sidelines awaiting more clues on the future trend of US monetary policy. Friday’s key US nonfarm payrolls report will be watched for the latest clues on the strength of the labour market recovery.

The disappointment over Tokyo’s decision to delay a sales tax increase reverberated in the currency markets with the Japanese yen falling one big figure overnight to 109.480 from an overnight high of 110.830. — Reuters