Asian Shares Fall as China and Fed Anxiety Grips Market

Asian shares skidded to three-week lows and the dollar sagged on Tuesday, after weak Chinese data rekindled worries about its fragile economy and led to sharp losses on Wall Street.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.7 percent in early trading, touching its lowest levels since Sept. 8.

Japan’s Nikkei stock index .N225 tumbled 2.4 percent.

Chinese industrial companies’ profits fell at their fastest rate in four years, official data showed on Monday, sparking fresh fears about the strength of that country’s economy ahead the final reading of China’s Caixin Purchasing Managers’ Index on Thursday.

On Wall Street on Monday, major indexes all closed sharply down. The S&P 500 index .SPX hit a one-month low on bullish U.S. consumer spending data in August as it raised concerns the Federal Reserve could hike rates at a time of slackening global growth.

The Fed held off from raising interest rates at its meeting earlier this month, citing worries about the global economy, particularly China.

But New York Fed President William Dudley said the central bank remains on track for a likely rate hike this year and could move as soon as next month.

John Williams, head of the San Francisco Fed, also signaled support for an interest rate hike this year, though Chicago Fed chief Charles Evans sounded a far more dovish tone.

Via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza