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Why Are Asian Markets Weaker on December 5?

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Updated

Economic calendar

8:30 AM EST – US FOMC member Dudley speaks
9:00 AM EST – ECB President Draghi speaks
9:45 AM EST – US Markit Composite PMI (Nov)
9:45 AM EST – US services PMI (Nov)
10:00 AM EST – US ISM non-manufacturing employment (Nov)
10:00 AM EST – US ISM non-manufacturing PMI (Nov)
10:45 AM EST – BoE Governor Carney speaks
7:01 PM EST – UK BRC Retail Sales Monitor (Nov)

Asian markets fell on December 5—led by the banking sector. The banking sector lost strength due to the “no” vote during Italy’s referendum.

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China

The sentiment in the Chinese market weakened. It started the week on a weaker note as Italian Prime Minister Matteo Renzi announced his resignation. Constitutional changes were rejected by Italian voters. They voted “no” during the referendum on December 4. China’s banking sector fell when the market opened. It gained strength as the day progressed, but the remaining major sectors stayed lower. Improved global growth prospects along with strong manufacturing activity in China are supporting factors for the Shanghai Composite Index. Weak investment sentiment along with the impact of Italy’s referendum have a negative impact on the index.

On December 5, the Shanghai Composite Index fell by 39.49 points and closed at 3,204.35 (-1.2%). The SPDR S&P China (GXC) closed at 75.96 with a loss of 0.6% on December 2.

Hong Kong

The much-awaited Shenzhen-Hong Kong stock connect was initiated on December 5. It links Hong Kong’s Bourse and China’s Shenzhen. A large inflow of capital is expected from China to Hong Kong through the Shenzhen link. Even though the Shenzhen-Hong Kong stock link supports market sentiment, Hong Kong’s Hang Seng Index fell amid Italy’s referendum. The Hang Seng Index closed at 22,503 (-0.27%) on December 5. The iShares MSCI Hong Kong (EWH) fell 1.1% to 20.75 on December 2.

Japan

Japan’s Nikkei Index fell to two-week low levels on December 5. There was uncertainty in the market as Italy rejected constitutional reforms in the referendum on December 4. The construction, power, and textile sectors are major laggards in Nikkei on December 5. Nikkei closed at 18,274.99 (-0.82%) on December 5. The iShares MSCI Japan (EWJ) closed at 49.62—a gain of 0.31% on December 2.

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