Asian markets stumble again despite Wall St bounce amid growth, earnings fears

Asian shares slipped again on Friday morning, deepening this week's markets rout, after disappointing results from Alphabet Inc and Amazon.com heightened concerns over the outlook for US corporate earnings, global trade and economic growth.

The wobbly start for regional bourses came despite a bounce on Wall Street overnight, which was helped by bargain-hunting and positive earnings from Microsoft Corp. Those gains were put into perspective, however, as shares of both Amazon.com Inc and Alphabet Inc fell sharply after the closing bell on disappointing earnings.

Predictably, the Nasdaq futures turned down 1 per cent and S&P E-mini futures fell 0.8 per cent, underscoring broad worries about US corporate earnings, and the outlook for the economy, which triggered a plunge on Wall Street on Wednesday and sent global markets into a tailspin.

Markets down

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.69 per cent, erasing tiny gains made in the opening hour. The index has been bruised by a heavy sell-off in the past several days, and is on course for its fifth weekly loss - its longest such streak since 2015. It has fallen more than 3 percent this week.

Shares in China moved in and out of the black in choppy trade, with the blue-chip index down 0.39 per cent and the Shanghai Composite off less than 0.1 per cent.

Chinese shares have been hit by volatility this week amid a string of official announcements and measures aimed at supporting the markets following a recent plunge. The heavy sell-off has raised concerns about risks posed by about $620 billion worth of shares pledged for loans. In Hong Kong, the Hang Seng index was 0.55 per cent lower, with tech shares dropping 1.9 per cent.

Tech firms also fell in South Korea, where the broader market fell 1.7 per cent, deepening losses after the Kospi closed at its lowest level since January 2017 on Thursday. Chipmaker SK Hynix was down 1.24 per cent after falling 3 per cent on Thursday, and Samsung Electro-Mechanics Co Ltd was 5.58 per cent lower.

In Australia, shares turned down 0.31 per cent after gaining modestly at the start. Japan's Nikkei stock index also snapped back into the red after pushing up in early deals, last trading down 0.22 per cent after tumbling 3.7 per cent on Thursday.

Economic outlook concerns

Financial markets have been whipsawed in recent sessions on concerns over global growth as investors fretted over US-China trade frictions, a mixed bag of US corporate earnings, Federal Reserve rate hikes and Italian budget woes. A slowdown in China has been particularly worrying for policy makers and investors, hitting asset markets from stocks to currencies and commodities.

Analysts at Capital Economics sounded a cautious note, suggesting that the bounce in the S&P 500 index on Thursday was only temporary as investors worries about the economic outlook worsen. “The first, and most important (worry) is that Fed tightening and fading fiscal stimulus will cause the US economy to take a turn for the worse...The second is that China's economy will continue to struggle,” the analysts said in a note to clients. “As we have been arguing for a while now, these worries are likely to get worse over the next twelve months or so.”

Investors will get a chance to check the US economic pulse later Friday when the government releases third-quarter GDP data.

ANZ analysts highlighted weak US core durable goods data as suggesting that “investment is not taking off, even with the apparent tailwind from tax cuts and USD repatriation.” “This indicates that the boost to GDP growth from the fiscal stimulus could be fairly transitory,” the analysts said.

Currency market

IIn currency markets, the euro edged lower, extending weakness after European Central Bank President Mario Draghi said the bank's 2.6 trillion euro ($2.96 trillion) asset purchase programme will end this year and interest rates could rise after next summer, despite fears about the monetary union's economic and political future. The single currency was 0.03 per cent lower at $1.1371.

The dollar was off 0.11 per cent against the yen at 112.29 . The dollar index, which tracks the greenback against a basket of six major rivals, was 0.04 percent lower at 96.636. The yield on benchmark 10-year Treasury notes fell to 3.1092 percent compared with its US close of 3.136 per cent on Thursday.

Oil prices

Oil prices gave up some ground after earlier rising on signals from Saudi Arabia's energy minister that there could be a need for intervention to reduce oil stockpiles. US crude dipped 0.74 percent at $66.83 a barrel. Brent crude fell 0.49 percent to $76.51 per barrel.

Spot gold was down slightly at $1,230.90 per ounce.