Asian markets bounce back after more Wall Street losses – as it happened

Asian stock markets are fighting back against the tide of selling seen in Wall Street again overnight.

It’s a mixed picture in financial markets but the main points are:

• Tokyo (0.44%) and Sydney (o.o5%) are down.
• Seoul (1.1%) and Hong Kong (o.5%) are up, and Shanghai is flat.
• In currencies, the US dollar index is down slightly at 94.97. The Aussie dollar is up a bit in the past few hours at US71.21 while the yen is holding steady against the dollar. The pound is up at $1.323.
  
• The FTSE100 is seen opening up 0.1% while the Dax in Frankfurt will rise 0.6%, according to futures trade.
• Chinese exports grew 6.5% for the year so far, showing decent growth despite trade tensions.
• But the China customs agency warned that growth may slow in the fourth quarter
• Chinese media hints at state intervention to stem possible losses
• In Australia, mortgage lending was down 2.1% in August – more ethan the market expected and bad news for super-leveraged local housing industry
• Australia’s Reserve Bank said the country is at risk from some external shocks such as a US-China trade war or a slowdown in China.

Catch up with our market wrap here:

Or check out Richard Partington’s excellent explainer about why stocks are going down (or is that up?):

And with that I’m wrapping up this blog. The inestimable Graeme Wearden will be back at 7am UK time.

Thanks for joining me.

And more still from China.

The Shanghai Composite, which fell by as much as 6% on Thursday, was flat but in a sign of possible state intervention, the state-run Securities Times sought to soothe jittery investors by calling for more market-friendly policies from the government in Beijing.

Courtesy of Reuters...

Authorities “should roll out positive measures so that investors know the government cares about the stock market, while listed companies and financial institutions should also contribute to improving market confidence,” the media said

State-owned Global Times said in an editorial that China’s stock market “has a limited impact on the whole Chinese economy, and the Chinese economy has withstood this round of impacts.” “What will happen to the US stock market and how it affects the US economy remain to be seen,” the Global Times editorial said.

More on China. The country’s customs agency says foreign trade grow may slow in the fourth quarter compared to Q4 last year.

But reuters reports that spokesman Li Kuiwen says exporters are diversifying their markets, which will support overall export growth.

The reflects a very strong start to 2018 – and a trade surplus of 1.44 trillion yuan (US$208.72 billion). But because it’s only the first three quarters we don’t know the full picture of how the trade tensions have impacted.

Still with China, and the Shanghai market is exactly flat, while Hong Kong is up 0.5%. The Nikkei is off 0.44% and Sydney is just in the red by 0.05%.

And in case you’re wondering what all this is about, you’re in good company ... the US economist Paul Krugman doesn’t have a clue either.

Some reaction to the Australian housing market numbers, which are quite bad. Less lending = lower house prices as one tweeter neatly up sums. But at least the number of first-time buyers is the highest for six years.

The bank hearings have wound up in Canberra.

In final questions, ANZ chief Shayne Elliott said fewer customers used physical banks to do their business and so ANZ plans on closing about 12 of its 650 or so branches. That follows a trend, Elliott says, which had been set over the last couple of years, with 30 to 50 branches being closed a year.

Elliott now heads to his meetings with bank customers who have come to Canberra to discuss their issues with him.

Next Friday, Andrew Thorburn, the head of NAB, will face the committee.

The positive moves in the Chinese markets come despite the Singapore central bank announcing a tightening of monetary policy. It’s a sign of the times.

Singapore, which manages policy through exchange rate settings rather than interest rates, noted that it expected steady growth despite the possibility of trade tensions disrupting the global outlook.

Monetary Authority of Singapore said:

In 2019, trade frictions between some major economies and the uncertainty they pose could weigh more discernibly on global economic activity. Barring a significant setback in global growth, the Singapore economy should expand at a pace close to potential in 2019.

The Chinese markets have opened up. Hong Kong has managed a gain of 0.5% while the Shanghai Composite is up 0.16%.

As far as Australia is concerned, the RBA says the economy is at risk from external shocks and says the incipient US-China trade war or a slowdown in growth in China could trigger a domestic problem.

Australia would be sensitive to a sharp contraction in global growth or dislocation in global financial markets because of the importance of trade and capital inflows. A worsening in external conditions could see a downturn in the domestic economy, reduced availability and higher cost of offshore funding and falls in asset prices, with a resulting deterioration in the performance of borrowers and lenders.

As for the housing market, it says it has turned a little and says it could be “a positive development for financial stability” However, it could also be bad news for people who have borrowed too much and find themselves in negative equity as lending requirements tighten and house prices fall.

Some existing borrowers may find they do not meet new lending standards and so have difficulty refinancing. Similarly, while most borrowers with loans transitioning from interest-only to principal and interest payments are well placed to meet the higher payments, a small share could struggle.

The Reserve Bank of Australia has issued its financial stability review today. It says the rise in US interest rates blamed for the current market volatility are not causing much disruption.

But it says that some risks are emerging as the Fed moves away from the low-interest environment:

The extended period of low-interest rates has seen some financial stability risks emerge. Notably compensation for risk is very low with asset prices in a range of markets at high levels, underpinned by low long-term interest rates. Household, corporate and sovereign debt has also risen to high levels in some jurisdictions. For emerging market economies – especially those with structural or cyclical vulnerabilities – there are concerns about the implications of a tightening in financial conditions in the advanced economies.

Those housing finance figures are not great news for Australia’s banks, which have built their huge profitability in recent years on some heroic mortgage lending.

The financial sector of the ASX 200 is down 0.77% today in a market off 0.25% overall.

Things go from bad to worse in the Australian housing market. Figures just released by the bureau of statistics show that total dwelling finance dropped by 2.1% in August to just over $30bn – much worse than the -1% expected and a big drop on the 0.4% increase in July.

Another big fall in investor lending. It’s down -1.2%.

On the currency markets, the yen has continued to hold up against the dollar at 112 to the greenback. A stronger yen is usually not so good for the Nikkei, which is a stronghold of Japan’s big exporters.

The Aussie dollar – a key proxy for emrging markets in the Asia Pacific region – has also fought back during the big stock selloff, going from around US70.5 to US71.27 this morning.

The Nikkei has dropped a modest amount this morning. We’re currently off by 0.22%, or 50 points, at 22,541 points. The Kospi in Seoul is up 0.47%. Sydney is now down only 0.15%.

Elliott also admits that ANZ’s profits have been hit by the aftermath of the commission, explaining that the bank’s return on equity has fallen from 17-18% to 11% in the past few years.

“ANZ’s profitability is dramatically lower than it was,” he says.