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GLOBAL MARKETS-Asian shares seen bouncing but sell-off not over yet as sentiment fragile

Published 2018-10-28, 07:52 p/m
© Reuters.  GLOBAL MARKETS-Asian shares seen bouncing but sell-off not over yet as sentiment fragile
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* Asian stock markets : https://tmsnrt.rs/2zpUAr4

* E-Mini futures for S&P 500 up 0.4 pct, Australian shares buoyant

* Poor industrial profits data from China likely to weigh

By Swati Pandey

SYDNEY, Oct 29 (Reuters) - Asian shares look set for a modest bounce on Monday, though sentiment remains fragile as bears are on the ascendancy after steep declines across world financial markets last week on heightened worries over corporate earnings and global growth.

E-Mini futures for the S&P 500 ESc1 and Dow minis 1YMc1 jumped 0.4 percent each in early Asian trade while Nikkei futures NKc1 were also in the black.

New Zealand shares .NZ50 opened lower while Australian shares .AXJO rose 0.7 percent.

That left MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS 0.2 percent higher after sliding almost 4 percent last week.

A sense of fear has gripped financial investors after hefty losses across major equity indices last week left them with negative returns for the year.

Sentiment has been hit by a range of negative factors from an intensifying China-U.S. trade conflict to worries about U.S. corporate earnings to Italian budget woes as well as Federal Reserve rate increases.

The S&P 500 .SPX ended at its lowest level since early May on Friday and flirted with correction territory, pressured by heavy losses in technology and internet shares.

"Earnings in the Q3 season did underwhelm, U.S. economic and corporate earnings growth are likely in the process of peaking, the metrics watched closest by the Federal Reserve suggest tightening will continue, and American deficits are unsustainable," JPMorgan (NYSE:JPM) analysts said in a note.

"And, while the US-China trade tea leaves have improved over the last several weeks, the path towards détente or resolution remains nebulous."

The analysts expect the S&P500 to rebound from the current 2,650 levels although any upside will likely be limited.

Poor economic indicators from China recently is also likely to weigh further on investor sentiment.

Data out over the weekend showed profit growth at China's industrial firms slowed for the fifth consecutive month in September as sales of raw materials and manufactured goods further ebbed. Australian dollar AUD= , which is often traded as a liquid proxy from the Chinese yuan, was little changed in early trading at $0.7095. The currency fell 0.4 percent last week.

The safe-haven Japanese yen JPY= has benefited from the global sell-off in riskier assets as investors unwound carry trade exposures. It gained 0.6 percent last week and was last flat at 111.89 per dollar.

Over this week, investors will be keeping an eye on the Bank of Japan monetary policy announcement due Wednesday.

The dollar index .DXY was a tad firmer at 96.407 after gaining 0.7 percent last week.

The euro EUR= hovered near more than two-month lows to last hold at $1.1398. Investors heaved a sigh of relief after German Chancellor Angela Merkel's junior coalition partners gave her conservatives until next year to deliver more policy results. concerns loomed over her future after both parties suffered in a regional election on Sunday.

In commodities, oil was a slightly higher with U.S. crude CLcv1 up 11 cents at $67.7 per barrel and Brent LCOcv1 added 17 cents to $77.79.

Spot gold XAU= was barely changed at 1,233.11 an ounce.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets

https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations

https://tmsnrt.rs/2Dr2BQA

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Shri Navaratnam)

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