Asian shares got off on the back foot on Wednesday after weak manufacturing activity reports from both the U.S. and China sent Wall Street reeling, while the dollar steadied after steep losses. Data showing U.S. factory activity hit a more than two-year low in August added to an already grim mood, coming on the heels of a survey showing China's manufacturing sector shrank at its fastest pace in three years last month. The downturn in markets is based less on rising fears that China's economy is slowing but is "more that the policy initiatives seem engineered on a daily basis and the plans seem to lack a cohesive, well thought-out process," Chris Weston, chief market strategist at IG, said in a note.
U.S. factory activity braked to a more than two-year low in August, but sturdy gains in automobile sales and construction spending suggested the economy remained on solid footing. The sharp slowdown in manufacturing, which has been hurt by a strong dollar and deep spending cuts in the energy sector, was probably an early indication of fallout from the recent turmoil in stock markets, economists said. "It suggests that the recent eruption in uncertainty toward Chinese and global growth is beginning to affect U.S. business decisions," said Millan Mulraine, deputy chief economist at TD Securities in New York.
Oil prices fell as much as over 2 percent in early Asian trade on Wednesday, as a stronger than expected build in U.S. crude oil stocks and weaker U.S. manufacturing data fueled a rout in prices that started in the previous session. Brent and U.S. crude finished around 8 percent lower on Tuesday to end a 25-percent three-session surge, the largest three-day gain since 1990. This rollercoaster volatility could continue especially if there are similar wild swings in the equity markets, said Ric Spooner, chief market analyst at Sydney's CMC Markets.
DETROIT (Reuters) - The U.S. auto industry powered ahead in August, topping sales estimates and shrugging off gyrating stock markets as consumers continued to show their penchant for pickup trucks and SUVs.
WASHINGTON/NEW YORK (Reuters) - Kmart Corp has paid $1.4 million to settle U.S. allegations that it violated the federal False Claims Act by inducing Medicare beneficiaries to fill prescriptions at its pharmacies, the Department of Justice said on Tuesday. The government said the accord resolves allegations that Kmart, a unit of Sears Holdings Corp , let beneficiaries use drug manufacturers' coupons to reduce or eliminate prescription co-payments. Kmart was also accused of improperly offering discounts on gasoline purchases at participating gas stations based on the number of prescriptions filled.