Stocks in Asia traded lower on Tuesday morning amid concerns about the global outlook, after the International Monetary Fund (IMF) slashed its world economic forecast on Monday.
In Japan, both the Nikkei 225 and Topix index fell 0.18 percent and 0.22 percent respectively. The moves upward came as shares of index heavyweight Fast Retailing, the company behind the Uniqlo chain of apparel stores, slipped about 0.5 percent.
South Korea’s Kospi was largely flat despite the country’s economic growth for the fourth quarter of 2018 coming in above expectations.
The ASX 200 declined more than 0.3 percent, despite most sectors seeing gains. The heavily-weighted financial subindex Down Under declined more than 1 percent as shares of the country’s so-called Big Four banks saw losses. Australia and New Zealand Banking Group slipped 1.43 percent, Commonwealth Bank of Australia declined 1.3 percent, Westpac fell 1.41 percent and National Australia Bank shed 1.08 percent.
The International Monetary Fund reduced its estimate for global growth on Monday, cautioning that the growth momentum seen in recent years is slowing.
The IMF now projects a 3.5 percent growth rate worldwide for 2019 and 3.6 percent for 2020. These are 0.2 and 0.1 percentage points below its last forecasts in October — making it the second downturn revision in three months.
“A range of triggers beyond escalating trade tensions could spark a further deterioration in risk sentiment with adverse growth implications, especially given high levels of public and private debt,” the Fund said.
These potential triggers include a “no-deal” Brexit for the U.K. and a deeper-than-envisaged slowdown in China. The IMF report comes on the back of China reporting its slowest economic growth in almost three decades.
Speaking at the World Economic Forum in Davos, Christine Lagarde, Managing Director of the IMF, said: “After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising. But even as the economy continues to move ahead … it is facing significantly higher risks.”
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.336 after touching an earlier high above 96.4.
The Japanese yen, widely viewed as a safe-haven currency, traded at 109.64 against the greenback after seeing levels below 109.5 in the previous session. The Australian dollar was at $0.7155 after slipping from highs of about $0.717 yesterday.
— CNBC’s Silvia Amaro contributed to this report.
