Asia report: Most markets fall as IMF downgrades regional forecast

Most markets in Asia finished weaker on Thursday, as the International Monetary Fund downgraded its forecast for the region for the year to the lowest “in living memory”.

In Japan, the Nikkei 225 was down .7% at 23,474.27, as the yen weakened 0.15% against the dollar to last trade at JPY 104.75.

Robotics specialist Fanuc was up 0.26% and Uniqlo owner Fast Retailing gained 0.4%, while technology giant SoftBank Group was marginally lower, losing 0.01%.

Airlines were also weaker, with ANA falling 4.08% amid reports it would report multi-billion dollars losses for its year ending March, while Japan Airlines was 2.21% lower.

The broader Topix index was 1.09% weaker by the end of trading in Tokyo, settling at 1,619.79.

On the mainland, the Shanghai Composite was off 0.38% at 3,312.50, and the smaller, technology-centric Shenzhen Composite lost 0.49% to 2,243.24.

South Korea’s Kospi was 0.67% weaker at 2,355.05, while the Hang Seng Index in Hong Kong went against the regional trend, rising 0.13% to 24,786.13.

Both of the blue-chip technology stocks were weaker in Seoul, with Samsung Electronics down 1.31%, and chipmaker SK Hynix off 0.6%.

The IMF downgraded its forecast for the Asia-Pacific region for 2020 overnight, to a contraction of 2.2%, described by the organisation’s acting director for the region Jonathan Ostry as “the worst outcome for this region in living memory”.

“Our latest Regional Economic Outlook shows that a recovery started in the third quarter, but growth engines are not all firing with the same power across countries, leading to a multi-speed recovery,” Ostry said in a blog post.

CMC Markets chief market analyst said the “phoney war” over Covid-19 stimulus in the US was also driving losses, as investors grew more impatient with the impasse between Republicans and Democrats in Washington.

“The penny appears to be finally dropping that there is unlikely to be a plan that will be able to get past the Republicans in the US Senate, even if Nancy Pelosi and Steve Mnuchin were able to put something down on paper, in their various short phone calls over the past few days,” he said.

“The Republicans in the Senate want to advance a much smaller relief bill of $500bn, well below the $2.1trn bill the Democrats want, and also well below the $1.9trn bill that President Trump has said he would be happy to sign.”

Hewson said the impasse looked set to continue well past the 3 November election date, as even if the Democrats were to win, they would still be unable to enact anything until Joe Biden was sworn in as President in January.

“In the event President Trump were to win a second term, the mathematics for the Senate would still need to change for him to be able to have another go at pushing a bill through.”

Oil prices were higher as the region went to bed, with Brent crude last up 0.31% at $41.86 per barrel, and West Texas Intermediate rising 0.25% to $40.13.

In Australia, the S&P/ASX 200 was off 0.29% at 6,173.80, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was off 0.2% at 12,407.29.

The down under dollars were in a mixed state against the greenback, with the Aussie last off 0.31% at AUD 1.4093, while the Kiwi strengthened 0.05% to NZD 1.5020.