* China trade data disappoints raising more FX weakness
* U.S. stocks cautious amid thin volume, technicals bearish
* Asian FX weighed down by U.S. rate view; Thai baht in
* Risk aversion pushes Japanese yen higher
By Saikat Chatterjee
HONG KONG, Oct 13 Asian stocks stumbled to
three-week lows and U.S. stock futures and Treasury yields fell
after China's September trade data showed a sharp decline in
exports, raising fresh concerns about the health of the world's
Risky assets have had a torrid start to the final quarter of
2016 after recent outperformance as concerns around the outcome
of U.S. elections, the fallout from a "hard Brexit" and a
struggling German banking sector spread turmoil in markets.
A weak Asia was seen pushing down European stocks lower with
Britain's FTSE, Germany's DAX and France's CAC
expected to open 0.3 percent to 0.4 percent lower.
Early on Thursday, the mood soured after data showed Chinese
imports in dollar terms were back in contractionary territory in
September while exports dropped by a sharper-than-expected 10
The weak trade data fuelled a broader risk-off move. Some
analysts said the soft data also raised concerns that China may
pursue a weaker currency policy in the coming months, stoking
deflationary pressures for the rest of the region at a time when
corporate earnings' growth has slowed.
"The continued underwhelming performance of Chinese exports
adds weight to our view that the People's Bank will maintain its
recent policy of gradual trade-weighted renminbi depreciation in
coming quarters," economists at Capital Economics wrote in a
MSCI's broadest index of Asia-Pacific shares outside Japan
fell 1 percent, touching its lowest since Sept.
19. Hong Kong stocks fell 1.2 percent and Japanese shares
were down 0.4 percent thanks to a stronger yen.
"The China data has exacerbated the broad cautious mood and
we should see more gains for the yen and other safe-haven
assets," said a currency trader at an Asian bank in Hong Kong.
Ten-year yields on U.S. Treasury debt fell five
basis points to 1.74 percent, a relatively large move in the
Asian timezone, before rebounding partially while U.S. futures
deepened losses to be down 0.7 percent on the day.
Despite the broad pull-back in U.S. Treasury yields, markets
were pricing a greater probability of a rate increase in
December, even though some analysts warned that higher risk
aversion may force the Fed to stand pat.
"Risk aversion is high among investors due to geopolitical
risks in Europe on the horizon and we expect the Fed to remain
on hold in December and expect a rate increase only next June,"
said Fan Cheuk Wan, head of investment strategy for Asia at HSBC
Wall Street struggled to find fresh momentum after breaking
conclusively below a 100-day moving average this week. The Dow
Jones industrial average closed up 0.09 percent, while
the S&P 500 gained 0.11 percent.
The CBOE Volatility Index, the "fear gauge" of
near-term investor anxiety, held around 16, indicating broader
Elsewhere, sterling treaded water after British
Prime Minister Theresa May's offer to give UK lawmakers a say in
plans to leave the European Union.
Within Asia, the Thai baht was in focus after falling
to an eight-month low in the previous session on concerns about
the health of 88-year-old King Bhumibol Adulyadej. The health
of the world's longest reigning monarch has "overall not yet
stabilised", the palace said on Wednesday.
Oil prices struggled following a 1 percent drop overnight
after the Organization of Petroleum Exporting Countries reported
its output hit an eight-year high in September, offsetting
optimism over the group's pledge to restrict output.
U.S. West Texas Intermediate crude slipped 0.8
percent to trade at $49.78 a barrel. Gold stabilised around the
$1,260 per ounce level after falling sharply last week.
(Editing by Eric Meijer and Richard Pullin)