Asian markets on Wednesday logged one of their worst quarters since the global financial crisis, with the double threat of higher interest rates in the U.S. and China’s slowdown unlikely to ease heading into October.
The Nikkei 225 index recovered 457.31 points, or 2.7%, to 17,388.15. Still, the Nikkei closed out its worst quarter since 2010 and Australia’s ASX its worst since 2011.
In Hong Kong, the Hang Seng Index recouped 289.70 points, or 1.4%, to 20,846.30
While regional stocks and currencies recovered from Tuesday’s steep losses in the last trading day of the quarter, the period was a bruising one for nearly all of Asia’s markets.
Adding to the gloom, industrial metals, including copper and zinc have fallen to multiyear lows. Prices for Brent crude oil the international benchmark, have halved since this time last year.
By Wednesday, Asian stocks rebounded from near their lowest levels this year, following a slight gain overnight in U.S. markets.
CHINA
The CSI 300 in Shanghai regained 24.09 points, or 0.8%, to 3,202.95
China’s main stock market posted its worst quarter since 2008 and its smaller Shenzhen index, in at least two decades. Markets in Singapore and Indonesia are set to post their worst quarters since the financial crisis. The MSCI Asia ex-Japan Index fell 19.1% from the beginning of the quarter through Tuesday’s close.
The surprise devaluation of China’s currency in August, after weeks of roller-coaster stock-market performance, raised the possibility that a slowdown in the world’s number-two economy may be deeper than official data reveals, with a fresh reading on the factory activity due Thursday. That’s a challenge for economies in the region reliant on Chinese demand for their exports.
While the U.S. Federal Reserve said it would delay raising interest rates earlier this month — citing instability in China and other emerging markets, among several factors — that emphasis has started to recede from more recent comments, leaving the chances of an increase before year-end on the table.
That has darkened the outlook for regional economies and sent government bond yields higher, as foreign investors shed their holdings.
Yields, which move inversely to prices, on five-year Indonesian government bonds rose steeply this quarter to their highest since 2009, having risen 1.6 percentage points over the period to 9.767% Wednesday.
The dynamic of rate uncertainty and a slowdown in China — one of the world’s biggest consumers of oil, metals and food — has pressured commodities, too.
Many are priced in U.S. dollars, and a stronger currency on expectations of higher rates has snuffed out demand as materials got more expensive for global buyers.
Prices of copper — a proxy for consumer demand, since it shows up in items from refrigerators to televisions — remains close to a six-year low reached after China’s devaluation. The red metal rebounded by mid-September after some producers announced production halts, but drifted lower again to $4,915 U.S. per ton. Reports overnight about protests at a Peruvian mine and supply cuts in Chile helped the metal recover in Asia on Wednesday.
Worries about oversupply and weak Chinese demand also have pressured prices of zinc, which fell to a five-year low last week. Zinc is primarily used as an anti-corrosive for steel, of which China is the largest producer. It is currently trading at $1,661.50 U.S. per ton.
Earlier this week, concerns about the debt load of mining-and-trading firm Glencore PLC gave investors fresh reasons to fear the ripple effects of China’s waning appetite for commodities, and sparked heavy selling across global markets.
In other markets
Markets in Korea returned to trading, the Kospi gaining 19.95 points, or 1%, to 1,962.81
Also returning were markets in Taiwan, with the Taiex Index tallying 48.89 points, or 0.6%, to 8,181.24
In Singapore, the Straits Times Index inched ahead 2.95 points, or 0.1%, to 2,790.89
The NZX 50 ditched 19.06 points, or 0.3%, to 5,593.36
The ASX 200 Index charged ahead 103.2 points, or 2.1%, to 5,021.63
