Monday September 28th, 2020 8:20AM

Asia shares post moderate losses after Wall Street sell-off

By The Associated Press
Related Articles
  Contact Editor

Shares were moderately lower in Asia on Wednesday following a bloodletting on Wall Street as goodwill generated by a truce between the U.S. and China over trade evaporated in confusion over exactly what the two sides had agreed upon.

The Dow Jones Industrial Average fell nearly 800 points. The yield on the benchmark 10-year Treasury note fell to its lowest level in three months, signaling that the bond market is worried about long-term economic growth.

The sell-off short-circuited a recent rally on Wall Street. The market gained Monday after the Trump administration said U.S. and China agreed to a temporary cease-fire in a trade dispute. Last week, stocks jumped when the Federal Reserve's chairman indicated the central bank could slow the pace of interest rate increases.

In Asia early Wednesday benchmarks fell by no more than 1.5 percent, the loss for the Hang Seng index in Hong Kong, which was at 26,860.43 by mid-morning. In Japan, the Nikkei 225 index fell 0.4 percent to 21,946.94. The Shanghai Composite index lost 0.5 percent to 2,653.54 and Australia's S&P ASX 200 dropped 1.3 percent to 5,641.10.

On Wall Street, investors' confidence in the U.S.-China agreement faltered after a series of confusing and conflicting comments from President Donald Trump and some senior officials. That revived fears that the disagreement between the two economic powerhouses could slow the global economy.

"This trade issue is the big overhang, the biggest ceiling, if you will, to keeping the markets from moving higher," said Randy Frederick, vice president of trading and derivatives at Charles Schwab.

Technology companies, banks and industrial stocks accounted for much of the broad sell-off. Utilities stocks rose. Smaller-company stocks fell more than the rest of the market.

Big losses for Boeing and Caterpillar, major exporters which would stand to lose much if trade tensions persist, weighed on the Dow.

The bond market signaled its concerns as the gap between two-year and 10-year Treasurys reached its narrowest difference since 2007. The 10-year yield is still higher, but not by much.

When yields for long-term bonds drop lower than yields for short-term bonds, it's what economists call an "inverted yield curve." It indicates that investors are forecasting a weaker economy and inflation in coming years. An inverted yield curve has also preceded each recession of the last 60 years, though sometimes by more than a year.

"You have the drop in bond yields and the implications on growth going forward," said Willie Delwiche, investment strategist at Baird.

The S&P 500 index slid 90.31 points, or 3.2 percent, to 2,700.06. The Dow plunged 799.36 points, or 3.1 percent, to 25,027.07, more than erasing its 488-point gain over the previous two trading days. It was down as much as 818 points earlier.

The technology-heavy Nasdaq composite lost 283.09 points, or 3.8 percent, to 7,158.43.

Small-company stocks, which investors see as more risky than large multinationals, fell more than the rest of the market. The Russell 2000 index gave up 68.21 points, or 4.4 percent, to 1,480.75.

The sell-off came ahead of Wednesday's closure of U.S. stock and bond markets in observance of a national day of mourning for former President George H.W. Bush.

The stunning turn in the markets followed a strong rally on Monday fueled by optimism over the news that President Donald Trump and his Chinese counterpart Xi Jinping had agreed at the G-20 summit over the weekend to a temporary, 90-day stand-down in the two nations' escalating trade dispute. That optimism quickly faded as skepticism grew that Beijing will yield to U.S. demands anytime soon.

"The actual amount of concrete progress made at this meeting appears to have been quite limited," Alec Phillips and other economists at Goldman Sachs wrote in a research note.

Moody's Investors Service suggested in a report Tuesday that despite the latest U.S.-China talks, both countries remain far from resolving their dispute.

"Narrow agreements and modest concessions in their ongoing trade dispute will not bridge the wide gulf in their respective economic, political and strategic interests," Moody's analysts wrote.

The trade dispute has rattled markets in recent months as signs emerged that it has begun affecting corporate profits. That's stoked traders' fears that if it drags much longer it could further weigh on global economic growth.

"There are plenty of reasons to believe that growth in either the economy or the markets is going to soften next year," Frederick said.

Meanwhile, markets also got a bit of a jolt Tuesday from remarks by John Williams, president of the Fed's New York regional bank. During a briefing with reporters, Williams said that, given his outlook for strong economic growth, he continues to "expect that further gradual increases in interest rates will best sponsor a sustained economic expansion."

Williams' comments seemed to counter Fed Chairman Jay Powell's remarks from last week.

The jitters helped drive demand for government bonds Tuesday, pushing prices higher. The yield on the 10-year Treasury note fell to 2.91 percent from 2.99 percent late Monday, a large move. The slide in bond yields, which affect interest rates on mortgages and other consumer loans, weighed on bank stocks. Citigroup fell 4.5 percent to $62.26.

Chipmakers were among the biggest decliners in a technology sector slide. Advanced Micro Devices dropped 10.9 percent to $21.12, while Micron Technology lost 7.9 percent to $36.88.

Homebuilders fell after luxury homebuilder Toll Brothers issued a cautious assessment of the housing market. Toll's shares slid 1.6 percent to $32.99.

Apple lost 4.4 percent to $176.69 after the consumer electronics giant was downgraded by HSBC analysts, citing the possibility that iPhone volume and value growth may moderate due to a saturated mobile phone market.

United Parcel Service slumped 7.4 percent to $106.77 and FedEx dropped 6.3 percent to $215.52. Morgan Stanley analysts said in a note that the market was underestimating the challenge those companies would face from Amazon Air.

Oil prices rose. OPEC members are expected to agree at a Thursday meeting to cut output in 2019. Benchmark U.S. crude gained 0.6 percent to settle at $53.25 per barrel in New York. Brent crude, the international standard, added 0.6 percent to close at $62.08 per barrel in London.

The dollar weakened to 112.82 yen from 113.69 yen late Monday. The euro was little changed at $1.1342. The British pound fell to $1.2716 from $1.2728.

Gold gained 0.6 percent to $1,246.60 an ounce. Silver rose 1 percent to $14.64 an ounce. Copper fell 1.8 percent to $2.78 a pound.

European markets fell on Tuesday, with Germany's DAX losing 1.1 percent and France's CAC 40 dropping 0.8 percent.


AP Economics Writer Martin Crutsinger in Washington contributed to this report.

  • Associated Categories: Associated Press (AP), AP National News, AP Online National News, Top General short headlines, AP Business, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Utilities
© Copyright 2020
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Asia shares post moderate losses after Wall Street sell-off
Shares moderately lower in Asia following a bloodletting on Wall Street
10:00PM ( 13 minutes ago )
Bankruptcy filing provides rare window into diocese finances
New Mexico's largest Catholic diocese has spent hundreds of thousands of dollars in recent months on lawyers to fight claims of clergy sex abuse and to prepare for a potentially lengthy fight in U.S. Bankruptcy Court
9:46PM ( 27 minutes ago )
Cuba to begin full internet access for mobile phones
Cuba says its citizens will be offered full internet access for mobile phones beginning Thursday, becoming one of the last nations to offer such service
9:43PM ( 29 minutes ago )
Associated Press (AP)
US law against encouraging illegal immigration struck down
A U.S. appeals court has struck down a federal immigration law that opponents warned could be used to criminalize a wide range of statements involving illegal immigration
8:59PM ( 1 hour ago )
Authorities hopeful wildfire death toll lower than feared
The search for people unaccounted for after the deadliest U.S. wildfire in at least a century is winding down in California, with just 11 names left on a list that once approached 1,300 and prompted fears that hundreds had died in the flames
8:47PM ( 1 hour ago )
The Latest: Special counsel notes Flynn's cooperation
The special counsel's office is calling Michael Flynn's cooperation "substantial" and is recommending no prison time for the former Trump administration national security adviser
8:43PM ( 1 hour ago )
AP National News
George H.W. Bush's legacy on racial issues is complicated
George H.W. Bush, lauded as a man of decency and civility, has a complicated legacy on race
7:38PM ( 2 hours ago )
Ballot fraud investigation muddies North Carolina election
One of the nation's last unresolved fall congressional races is awash in doubt as North Carolina election investigators concentrate on a rural county where absentee-ballot fraud allegations are so flagrant they've put the Election Day result into question
7:32PM ( 2 hours ago )
House GOP campaign arm targeted by 'unknown entity' in 2018
The House GOP campaign arm says it was targeted by an 'unknown entity' during the 2018 midterm campaign; the FBI is investigating the breach
7:18PM ( 2 hours ago )
Top General short headlines
The Latest: Trump says Macron's decision justifies his own
President Donald Trump says the French president's decision to delay an energy tax hike after massive protests justifies his own decision to withdraw from an international climate accord
8:14PM ( 2 hours ago )
Marlboro maker Altria the latest big company to explore pot
Marlboro-maker Altria latest major company considering expanding into marijuana industry
8:06PM ( 2 hours ago )
Trump, German auto executives meet at White House
Trump meets with executives from three big German automakers amid U.S.-European trade tensions focused on car exports
8:03PM ( 2 hours ago )
AP Business
Investors hear 3 words they fear: inverted yield curve
One of the most reliable warning signals for recession just got a bit brighter
5:49PM ( 4 hours ago )
2 attorneys general to subpoena Trump Organization, IRS
The attorneys general of the District of Columbia and Maryland plan to file subpoenas Tuesday against The Trump Organization, other entities, and a handful of federal agencies for records in their case accusing Donald Trump of profiting off the presidency
4:25PM ( 5 hours ago )
Markets Right Now: US stocks dive as trade jitters return
Stocks took a nosedive on Wall Street as investors worried that a U.S.-China trade truce reached over the weekend wasn't all it was cracked up to be.
4:16PM ( 5 hours ago )
AP Business - Economy
World shares retreat, dollar slips after US-China truce
World shares break rally, dollar slips after US-China truce over tariffs
5:28AM ( 16 hours ago )
Eurozone ministers reach compromise deal on reform package
Eurozone finance ministers have agreed to strengthen the single currency bloc's defenses against any future financial crisis.
5:24AM ( 16 hours ago )
Asian shares fall, dollar slips after US-China tariffs truce
Asian markets tumble, dollar slips as traders question US-China tariffs truce after relief rally
2:35AM ( 19 hours ago )
AP Business - Financial Markets
The Latest: German astronaut urges action on climate
A commander of the International Space Station says he has seen the impact of climate change on Earth and hopes nations can work together to tackle it
5:42PM ( 4 hours ago )
Macron caves in to French protesters - too late, they say
The French government caved in after Paris' worst rioting in decades and delayed an increase in energy taxes _ but it was seen as "too little, too late" by many protesters whose anger seems increasingly focused on embattled President Emmanuel Macron
4:45PM ( 5 hours ago )
US coal consumption drops to lowest level since 1979
Americans are using less coal this year than at any time since Jimmy Carter's presidency, a federal report says, despite the Trump administration's efforts to revive the country's coal industry
4:04PM ( 6 hours ago )
AP Business - Industries
Power cuts hit South Africa, hurting economy
South Africa's troubled power utility implements power cuts nationwide, intensifying concern about growth in one of Africa's biggest economies
6:25AM ( 15 hours ago )
The Latest: Miners honor their saint in climate talks city
Miners are celebrating their patron saint in the southern Polish city that's hosting U.N. climate talks
5:13AM ( 17 hours ago )
Oil prices perk up on trade truce, possible OPEC decision
Oil prices reverse a long slump, for a day at least, on US-China trade truce and expectation of OPEC production cuts
3:16AM ( 18 hours ago )
AP Business - Utilities
Bankruptcy filing provides rare window into diocese finances
New Mexico's largest Catholic diocese has spent hundreds of thousands of dollars in recent months on lawyers to fight claims of clergy sex abuse and to prepare for a potentially lengthy fight in U.S. Bankruptcy Court
9:46PM ( 29 minutes ago )
Cuba to begin full internet access for mobile phones
Cuba says its citizens will be offered full internet access for mobile phones beginning Thursday, becoming one of the last nations to offer such service
9:43PM ( 32 minutes ago )
APNewsBreak: President Donald Trump to attend Army-Navy game
AP NewsBreak: President Donald Trump will attend next week's Army-Navy Game in Philadelphia
9:36PM ( 39 minutes ago )
Actor-comedian Kevin Hart will host 2019 Oscars
Kevin Hart will host the 2019 Academy Awards; actor-comedian says he's 'blown away' by chance to host the ceremony
9:32PM ( 43 minutes ago )
Mueller recommends no prison for Flynn, citing cooperation
President Donald Trump's former national security adviser provided so much information to the special counsel's Russia investigation that prosecutors say he shouldn't do any prison time
9:21PM ( 54 minutes ago )