Asian shares hit fresh one-year lows in early trading on Thursday, while oil and precious metal prices also tumbled as Turkey’s currency crisis and fears of an economic slowdown in China fanned worries about global growth.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1.0 per cent, while Japan's Nikkei .N225 and the Australian benchmark dropped 1.2 per cent and 0.4 per cent, respectively.
Chinese stocks continued to sag, with the Shanghai Composite Index .SSEC and Hong Kong's Hang Seng index .HSI shedding 1.1 per cent and 0.9 per cent, respectively.
Tech shares came under pressure after China’s Tencent Holdings Ltd (0700.HK) reported its first quarterly profit fall in nearly 13 years on weak gaming revenue. The knock to the rest of the sector sent South Korea’s Samsung Electronics (005930.KS) to a one-year low.
Wall Street's major indexes closed lower on Wednesday, with the S&P 500 .SPX down 0.8 per cent, its biggest per centage drop since late June, amid disappointing earnings and escalating global trade worries.
“Negative news come from Turkey and China every day is upsetting global markets,” said Norihiro Fujito, senior market strategist at Mitsubishi UFJ Morgan Stanley Securities.
“Also, Tencent’s earnings shock hurt tech stocks, sending the tech-heavy Nasdaq lower. It reminded investors that the U.S.-China trade spat is starting to harm the health of even the tech firms, which had been a major driver of the U.S. share rally.”
Oil prices took an additional hit after data showed a surprise weekly increase in US crude stockpiles, compounding worries about a weaker global economic growth outlook.
US crude oil CLc1 fell to two-month lows, falling 0.6 per cent in early Asian trade to as low as $64.42 per barrel, after Wednesday’s 3.2 per cent fall.
Brent LCOc1 slipped 0.25 per cent to $70.58, after a fall of 2.4 per cent on Wednesday.
Spot gold XAU= dropped 1.0 per cent to $1,162.31 an ounce in early Asian trade on Thursday, hitting its lowest levels since January last year.
Copper CMCU3 lost 4.0 per cent to $5,801.00 a tonne and zinc CMZN3 fell 6.3 per cent, touching its lowest level since October 2016 on Wednesday.
The escalation in global trade tensions continued to weigh on sentiment with Beijing lodging a complaint to the World Trade Organization to determine the legality of US tariff and subsidy policies.
Turkey also raised tariffs on some US products in response to Washington’s levies, Vice President Fuat Oktay wrote on Twitter, Reuters reported.
The United States on Wednesday ruled out removing steel tariffs that have contributed to a currency crisis in Turkey even if Ankara frees a US pastor, as Qatar pledged $15 billion in investment to Turkey, supporting a rise in the Turkish lira.
The euro EUR= and the offshore Chinese yuan CNY=D4 bounced back following a report that Chinese delegation led by vice commerce minister Wang Shouwen will travel to the United States for trade talks in late August.
The euro and yuan gained 0.2 per cent and 0.3 per cent, respectively.
