Asian Markets Extend Decline Amid Global Recession Fears

The Chinese equity market continued its downward trajectory on Friday, following a three-day losing streak that erased nearly 60 points, or 2.1 percent. With the Shanghai Composite Index hovering just above the 2,765-point level, further losses appear imminent for Monday’s session.

The global outlook for Asian markets remains negative due to growing concerns about the health of the worldwide economy. Following firm declines in European and U.S. markets, Asian bourses are expected to open in a similarly negative fashion.

The Shanghai Composite Index closed slightly lower on Friday, dragged down by losses in property, resource, and energy sectors.

For the session, the index declined 22.50 points, or 0.81 percent, closing at 2,765.81 after fluctuating between 2,765.64 and 2,804.09. Meanwhile, the Shenzhen Composite Index fell 24.44 points, or 1.60 percent, ending the day at 1,505.18.

Among the most active stocks, Industrial and Commercial Bank of China edged up 0.18 percent and Bank of China gained 0.21 percent, while China Construction Bank fell 0.28 percent and China Merchants Bank rose 0.16 percent. Agricultural Bank of China added 0.22 percent, but China Life Insurance slipped 0.32 percent. In the resource and energy sectors, Jiangxi Copper dropped 0.42 percent, Yankuang Energy retreated 1.35 percent, PetroChina skidded 1.11 percent, and China Shenhua Energy tumbled 1.76 percent, though China Petroleum and Chemical (Sinopec) managed a 0.76 percent gain. Huaneng Power declined 1.33 percent. Property stocks also suffered, with Gemdale plummeting 6.22 percent, Poly Developments slumping 1.28 percent, and China Vanke stumbling 1.82 percent. Aluminum Corp of China (Chalco) remained unchanged.

Wall Street provided a weak lead, as major averages opened mixed but quickly turned negative, spending the remainder of the session in the red and finishing with steep losses.

The Dow Jones Industrial Average fell 410.39 points, or 1.01 percent, to close at 40,345.41. The NASDAQ plunged 436.87 points, or 2.55 percent, to end at 16,690.83, and the S&P 500 sank 94.99 points, or 1.73 percent, to finish at 5,408.42.

For the week, the NASDAQ plummeted 5.8 percent, the Dow dropped 2.9 percent, and the S&P 500 tumbled 4.3 percent.

The Wall Street sell-off was driven by concerns over the U.S. economic outlook following a closely watched Labor Department report showing that August employment rose by less than expected.

While the data increases the likelihood of a 50-basis point interest rate cut by the Federal Reserve later this month, traders remained concerned that the central bank may have delayed action too long, risking a recession.

Oil prices fell to an 18-month low on Friday, weighed down by persistent concerns over the demand outlook following the disappointing jobs report. West Texas Intermediate Crude oil futures for October settled down $1.48, or 2.1 percent, at $67.67 a barrel.

Closer to home, China is set to release August consumer and producer price data later this morning. Overall inflation is expected to rise 0.5 percent month-over-month and 0.7 percent year-over-year, matching July’s monthly and annual increases. Producer prices are anticipated to fall 1.4 percent year-over-year, deepening from the 0.8 percent drop in the prior month.

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