Asian stocks drop on disappointing US data

Asian stocks are flashing red at press time, tracking the overnight drop in the US equities triggered by heightened recession fears. 

Japan’s Nikkei index is currently reporting a 0.70% drop and Australia’s S&P/ASX 200 is shedding 1.67%. 

Stocks in South Korea and Hong Kong are also reporting 1 percent losses and the Shanghai Composite index is down 0.9%. 

The US equities dropped in the overnight trade with the Dow Jones Industrial Average registering a 1.28% losses on disappointing macro data. 

The US Institute for Supply Management came in at 47.8% in September, the lowest since June 2009, marking the second consecutive month of contraction.

The data bolstered the US recession fears, forcing markets to price in a higher possibility of the Federal Reserve cutting rates in October. As of now, the markets see more than 60% chance of a rate cut in October versus 40% seen before the release of the ISM data. 

So far, however, the dovish Fed expectations have failed to put a bid under the Asian equities, possibly due to comments by the International Monetary Fund that the global economy could suffer a significant slowdown in the near future, courtesy of trade tensions. 

While stocks are losing ground, the demand for Gold, a traditional safe haven, seems to have weakened. The yellow metal is currently trading at $1,477 per Oz, representing 0.13% losses on the day, having clocked a low of $1,459 on Tuesday.