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Nikkei dives under 20,000 as Asian markets sharply pull back, by LUCY CRAYMER

The wild ride for global stock markets continued Friday, with Asian equities declining following selling in the U.S. and Europe.

The drop in Asia reversed yesterday’s gains, which followed declines earlier in the week.

“Sentiment is really key at the moment,” said Gavin Parry, managing director of Parry International Trading in Hong Kong. Earlier in the week, markets were whipsawed when some central bankers indicated ultra-easy monetary policies would start to end sooner rather than later.

In Japan, the Nikkei NIK, -1.09%   fell below 20,000 for the first time in two weeks. It was recently down 1.1% as the yen rebounded. A stronger yen often weighs on Japanese stocks.

The worst performer on Friday, though, was Australia’s S&P/ASX 200 XJO, -1.47%  . After rising Thursday, the index slid 1.4%.

Benchmarks in South Korea SEU, -0.43%   and New Zealand NZ50GR, -0.87%  , which hit fresh record highs Thursday, were recently down 0.4% and 0.6%, respectively.

Meanwhile, Parry said investors need to be prepared for “left-field surprises” in Hong Kong as China could make announcements that lift markets or the local economy ahead of Saturday’s handover observation. It has been 20 years since the British returned Hong Kong to Chinese sovereignty and President Xi Jinping is in town to mark the occasion.

The Hang Seng HSI, -0.88%   was recently off 0.9% as index heavyweight Tencent 0700, -1.55%   fell 1.6%.

The release of a better-than-expected official manufacturing PMI from China on Friday could provide support that isn’t limited to stocks. The index rose to 51.7 from 51.2 in May; a reading above 50 indicates expansion.

Chinese stock benchmarks were down just 0.2%.

Commodities continued to gain. Iron ore rose 1.5% overnight, though that wasn’t enough to provide support to Australian equities. Meanwhile, oil futures rose 0.5% in Asia trading Friday to build on six straight sessions of gains.

But the winning streak hasn’t seen a sharp move higher. The “pace tells us traders are acting cautiously rather that boots in straps and all,” said Stuart Ive, a client adviser at OM Financial. “The oversupply question mark won’t go away.”

 

Sent by MarketWatch

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