Asia markets tumble on Britain, EU worries

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HONG KONG: Japanese stocks led a plunge in Asian markets Monday, tracking a sell-off in the US and Europe on renewed worries about the global economy and uncertainty over Britain’s future in the European Union.

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Investors extended the selling that saw shares tumble at the end of last week on concern that central banks’ arse-nals are running low in their battle to kickstart growth.

And with next week’s referendum on whether Britain should stay in the EU on a knife-edge, analysts said traders were rushing to safe-haven investments such as the yen.

“The market hates uncertainty,” Yoshinori Ogawa, a markets strategist at Okasan Securities Co. in Tokyo, told Bloomberg News.

“Most market participants think that the UK will probably remain, but we’re seeing some poll results that show those who’ll vote to leave outnumber the ‘Remain’ camp, and this is making investors uncertain.”

Tokyo’s Nikkei took a hammering, sliding 3.5 percent, with a stronger yen hitting exporters. The greenback fell to 106.15 yen Monday from 106.93 in New York and is down more than 13 percent so far this year.

Hong Kong lost 2.5 percent and Shanghai dived 3.2 percent, while Seoul sank 1.9 percent and Singapore 1.6 per-cent. Taipei gave up more than two percent. Sydney was closed for a public holiday.

In early European trade London shed 0.6 percent, while Frankfurt and Paris each lost 1.2 percent.

Shares dived on Friday after European Central Bank boss Mario Draghi called for action to boost the eurozone economy, in comments taken as a sign it is struggling in its battle against   torpid growth.

Pound in retreat

His comments follow an indication from the Federal Reserve that it will likely not lift interest rates until the fourth quarter, while other central banks have either announced or are contemplating cuts.

Attention is now on meetings this week of the Fed and Bank of Japan, with hopes for at least some guidance on their plans.

Nerves are also frayed by a series of opinion polls indicating Britain could vote on June 23 to leave the EU, which many fear could unleash a fresh wave of global turmoil.

“The international focus on Brexit has stepped up,” Cameron Bagrie, chief economist in Wellington at ANZ Bank New Zealand, said in a client note.

“Yay or nay is only part of the issue — what we are seeing globally is more kickback from society toward integration and more anti-globalization. The politics associated with close votes are not good for mandates and driving good macroeconomic policy.”
Fears of an exit sent the pound tumbling to $1.4190 from $1.4250.

While the latest data out of China pointed to much-needed stabilization, there was very little euphoria, with offi-cials warning the “international environment remains complicated” and that “the economy is still under downward pressure”.

Oil prices sank for a third straight session, with both main contracts down more than one percent on fears over the global economy and after US producers reopened more rigs.

Key figures at 0800 GMT

Tokyo – Nikkei 225: DOWN 3.5 percent at 16,019.18 (close)

Hong Kong – Hang Seng: DOWN 2.5 percent at 20,512.99 (close)

Shanghai – Composite: DOWN 3.2 percent at 2,833.07 (close)

London – FTSE 100: DOWN 0.6 percent at 6,078.29

Euro/dollar: UP at $1.1262 from $1.1251 late Friday

Dollar/yen: DOWN at 106.15 yen from 106.93 yen

Pound/dollar: DOWN at $1.4190 from $1.4250

New York – DOW: DOWN 0.7 percent at 17,865.34 (close).

AFP

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