Asia stocks lower amid growth worries; oil rebounds

Asian shares drifted lower on Monday as signs of softening demand in China rekindled being nervous about the outlook for world growth, but Saudi Arabia’s offers to cut production helped to quit a slide in oil prices.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.07%, trimming earlier losses on a bounce in Chinese shares, but can not burgled positive territory.

Australian shares added 0.13%, while Japan’s Nikkei stock index gained 0.11%.

A combination of weak factory-gate inflation data in China and low oil prices weighed on global stocks on Friday, dragging MSCI’s gauge of world stocks to the worst day by 50 percent weeks. The index was last 0.09% lower.

Kevin Lai, chief economist for Asia ex-Japan at Daiwa Capital Markets, said there had been genuine concerns from an equity market perspective about China’s economic increase in general and its particular significant debt burden particularly.

“There’s oh dear the economy will surely can get back at a nice recovery path unless they could seriously compress the debt significantly … all of this deleveraging we’ve been preaching about hasn’t really delivered any improvements,” he said.

E-commerce giant Alibaba included in the uncertain outlook in China, recording the slowest-ever annual boost sales due to its annual “Singles’ Day” event.

Its sales outlook has weakened amid rising trade tensions between China additionally, the United States which may have taken a bite from China’s economy.

An index tracking consumer staples firms in China was 0.95% lower, at the same time the blue-chip CSI300 index rebounded from last week’s string of losses to find 0.68%.

Risk asset markets are already under intense pressure these days as fears of an peak in earnings growth added onto being nervous about slowing global trade and investment.

A spike in US bond yields, driven by way of the Federal Reserve’s deal with keep raising borrowing costs, has also shaken emerging markets as investors poured money into US dollar assets.

The Dow Jones Industrial Average fell 0.77% on Friday, the S&P 500 lost 0.92% as well as Nasdaq Composite dropped 1.65%.

The yield on benchmark US 10-year Treasury bonds closed at 3.189% on Friday.

The Wall Street losses came following Fed held rates steady earlier inside the week but stayed focused to tighten policy the following.

The Fed’s stance disappointed some investors who had hoped that October’s rout in equities could possibly have prompted policy makers to use a cautious approach on interest rates.

“Finance industry is pricing inside of a 25bp hike in December, with data flow suggesting pipeline inflation pressures are building,” analysts at ANZ said inside a morning note.

Saudi production cut

Taking some pressure off a clear, crisp stop by oil prices a week ago, Saudi Arabia’s energy minister said on Sunday that Riyadh plans to reduce its oil supply to world markets by 500,000 barrels a day in December, a universal decrease in about 0.5%.

That helped to lift oil prices on Monday, around crude rising 1.08% to $60.84 a barrel and Brent crude gaining 1.34% to $71.12 per barrel. However, Saudi Arabia’s supply cut may end up being a short lived answer to falling prices as global growth slows, with two of the world’s biggest economies – Germany and Japan – anticipated to report a contraction in output in future.

“Supply-side surprises appear to be the leading culprit, but concern that global demand is slowing can be creeping into markets and weighing on risk appetite,” the ANZ analysts said.

In fx, the dollar rose 0.18% against the yen to 114.03, and also the euro was down 0.11% when at $1.1322.

The dollar index, which tracks the greenback against a basket of six major rivals, was up 0.12% at 97.022.

The British pound was off 0.35% to fetch $1.2929. Sterling has become stressed in the last couple of weeks as investors worried over whether an orderly Brexit deal would be achieved.

Spot gold gained 0.07% to $1 210.09 per ounce.