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21 Aug 2015
Risk-off moods grip Asian markets, sell-off extends
FXStreet (Mumbai) - Asian markets extend their free-fall for the second straight session on Friday, with several global factors dampening the risk sentiment.
The ongoing sell-off and hence the risk-off mood was triggered by China on Tuesday after the Shanghai Composite crashed more than 3%. While Kazakhstan decided to remove the peg on its currency, the tenge, prompting a 23% plunge in the currency against the US dollar, also brought nervousness into the markets.
Furthermore, geo-political tensions in Turkey, Greece, and Korean Peninsula also added to the generalized risk aversion, sending US markets deep into the red and helping safe-haven assets such as gold and the Japanese yen gain. This dragged USD/JPY lower to fresh three-week lows of 122.98, eventually negatively impacting exporters’ stocks on Japanese bourses.
Adding to this, a gauge of manufacturing activity in China dropped to its lowest in 77 months in August, providing evidence that that Chinese economy is struggling to retain momentum emerged on Friday.
The Caixin-Markit China manufacturing Purchasing Managers' Index (PMI) fell to 47.1 in August, its lowest in more than six years, from 47.8 in July.
The Japanese benchmark Nikkei 225 is losing -2.10% at 19612. While the benchmark Australian S&P/ASX 200 index extends losses by -1.82% at 5192 as resource and financial stocks were weighed down by a lack of risk sentiment. Korea's benchmark Kospi index now trades -1.67% at 1,882 points in Seoul.
The Hong Kong's benchmark Hang Seng index losing -2.38% at 22216 while mainland China's benchmark Shanghai Composite pared losses, although trades -1.59% at 3609.
The ongoing sell-off and hence the risk-off mood was triggered by China on Tuesday after the Shanghai Composite crashed more than 3%. While Kazakhstan decided to remove the peg on its currency, the tenge, prompting a 23% plunge in the currency against the US dollar, also brought nervousness into the markets.
Furthermore, geo-political tensions in Turkey, Greece, and Korean Peninsula also added to the generalized risk aversion, sending US markets deep into the red and helping safe-haven assets such as gold and the Japanese yen gain. This dragged USD/JPY lower to fresh three-week lows of 122.98, eventually negatively impacting exporters’ stocks on Japanese bourses.
Adding to this, a gauge of manufacturing activity in China dropped to its lowest in 77 months in August, providing evidence that that Chinese economy is struggling to retain momentum emerged on Friday.
The Caixin-Markit China manufacturing Purchasing Managers' Index (PMI) fell to 47.1 in August, its lowest in more than six years, from 47.8 in July.
The Japanese benchmark Nikkei 225 is losing -2.10% at 19612. While the benchmark Australian S&P/ASX 200 index extends losses by -1.82% at 5192 as resource and financial stocks were weighed down by a lack of risk sentiment. Korea's benchmark Kospi index now trades -1.67% at 1,882 points in Seoul.
The Hong Kong's benchmark Hang Seng index losing -2.38% at 22216 while mainland China's benchmark Shanghai Composite pared losses, although trades -1.59% at 3609.