Shares in Asia showed its third week of lows on Wednesday as worries over the underlying strength of the Chinese economy.
Morgan Stanley’s Capital International’s broadest index of Asia Pacific stocks outside Japan was barely in positive territory after slipping to its lowest level since March 16. A day earlier, it slumped 1.6 percent, which is its largest plunge in almost two months.
Policy makers and market players are concerned that the recovery may be at best, volatile, or at worst, short lived, while global risky assets have staged a wise recovery from February’s weakness, particularly led by Chinese stock markets on hopes that the world’s second biggest economy can successfully avert a steep decline.
The cautious undertone rippled over into Europe with benchmark indices indicating a mixed open. Britain’s Financial Times Stock Exchange 100 climbed 0.5 percent, while Germany’s DAX 30 surged 0.1 percent, and France’s CAC 40 also gained 0.1 percent.
As stated by a market analyst, “A rebound based on property exuberance and quasi-fiscal stimulus means it might be more transient than the market wants to believe.”
Last week, data indicated that global markets are forecasted to have pumped $36.8 billion into emerging market stocks and bonds in March, which is the highest month inflow in almost two years.
However, that support is likely to come to an end with Asian shares dipping by 3.6 percent since the beginning of the month.
According to a chief market analyst, “Concerns around China are subsiding a little bit, but that doesn’t mean we’re there yet.”
On the other hand, in the United States, equity markets also indicated a mixed open as the Dow Jones Industrial Average sank 28 points or 0.2 percent to 17,574, while the Standard & Poor’s 500 remained unchanged, and the NASDAQ Composite jumped 0.3 percent.
“In a current environment, absence of any news should be treated as good news. We expect the minutes from the Fed meeting to be dovish, and confirm what Janet Yellen has said already,” an analyst noted.