Anxiety about China’s sluggish economy growth spill across Asian markets on Monday while US stock futures turning down and Chinese shares lingering in the red as concerns about US corporate earnings and global growth continued to pull down sentiment.
E-mini futures for the S&P 500 and Dow e-minis slipped around 0.3 percent each, giving up gains of as much as 0.4 percent earlier in the day. On the other hand, spreadbetters pointed to a firm start for Europe with FTSE futures 0.5 percent higher.
In Asia, Japan’s Nikkei dropped 0.2 percent, having jumped 1 percent earlier. South Korea’s KOSPI slumped 1.6 percent, while Shanghai’s SSE Composite shed 2.5 percent.
The losses in Asia were largely headed by China’s blue-chip index which declined more than 3.3 percent following disappointing earnings from the country’s top liquor maker, Kweichow Moutai.
Hong Kong’s Hang Seng index was also trading in the red, leaving MSCI’s broadest index of Asia-Pacific shares outside Japan most flat after rising over 0.5 percent earlier in the day.
Chinese data over the weekend underscored worries of a cooling economy as profit growth at its industrial firms slowed for the fifth month in a row in September as sales of raw materials and manufactured goods ebbed.
Citibank has forecast China’s real economic growth to slow to 6.4 percent year-on-year in the fourth quarter “amid trade headwinds and domestic uncertainties.”
“As lagging indicators, overall industrial revenue and profit should continue to soften accordingly,” it said.
Broader sentiment in global financial markets has been affected by a range of negative factors such as the worsening US-China trade conflict, worries about US corporate earnings, Federal Reserve rate increases, and Italian budget dispute.
Analysts cautioned that higher volatility after heavy losses across major equity indices left investors with negative returns for the year. Bears are also on the rise, with some indices already trading in the official correction territory amid increased worries over corporate earnings and global growth.
“We’re now halfway through the US earnings season and while headline growth remains strong, there are a number of trends making participants nervous,” wrote asset manager Insight Investment in a note to clients.
It cited “explicit commentary by Caterpillar, 3M, and Ford on the adverse effects of US import tariffs and disappointing revenue growth by Amazon and Alphabet among top concerns for investors.
More companies have lagged predictions this quarter with the beat rate on sales at 44 percent when compared with 58 percent last quarter, according to Insight Investment.
“European earnings are showing a similar trend, with only 43 percent beating estimates, the lowest in five years. Raw material costs appear to be the main headwind,” it said.
In another sign of increased risk aversion,10-year US Treasuries reversed early gains to be almost flat on the day.
Among emerging markets, Brazilian-linked stocks got some support from the South American country’s presidential election, which saw the win of far-right candidate Jair Bolsonaro whose campaign focused on pledges to clean up politics and curb crimes.
Tokyo-listed Brazilian stock exchange-traded funds increased almost 14 percent to 7-and-a-half-month highs after Bolsonaro, a former Army captain, claimed victory.