Asian stocks shuddered lower on Friday after shockingly weak export data from China heightened market fears about a global economic slowdown, a day after European policy-makers slashed growth forecasts for the bloc.
Beijing reported exports in February tumbled 20.7 per cent from a year earlier, far beneath forecasts of a 4.8 per cent drop and more than erasing January's surprise jump.
Analysts cautioned the timing of the Lunar New Year made it difficult to draw a true signal from the data noise, but the scale of the miss was alarming.
Adding insult to injury, China's leading brokerage Citic Securities issued a rare “sell” rating on the Shanghai-listed shares of People's Insurance Group of China (PICC), sending them down almost 10 per cent.
Shanghai blue chips quickly extended early losses to be down 2.9 per cent, the sharpest daily fall since October, while the dollar climbed on the yuan.
Japan's Nikkei dropped 2.0 per cent and Australia 0.9 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan skidded 1.2 per cent to a two-week trough.
E-Mini futures for the S&P 500 eased 0.2 per cent and spread-betters pointed to opening falls for European bourses.
The mood was brittle after the European Central Bank slashed its growth forecasts and surprised everyone with a new round of policy stimulus, leaving investors fearing the worst for the global economy.
ECB President Mario Draghi said the economy was in “a period of continued weakness and pervasive uncertainty” as he pushed out a planned rate hike and instead offered banks a new round of cheap loans.
The reversal came in the same week that Canada's central bank took a sudden dovish turn and dismal data from Australia to the UK instilled a sense of foreboding in markets.
“When central banks surprise like this some investors wonder whether that infers things are much worse than they thought,” said Gavin Friend, a senior market strategist at NAB.
“Our initial take is these developments are pressing down on market confidence, seen in lower bond yields and equities.”
Yields on German and French 10-year bonds dived to their lowest since 2016, while banking stocks took a beating. The euro duly sank to depths last seen in mid-2017, sending the safe-haven US dollar and yen surging.
EURO IN A HOLE
The next hurdle for investors will be US payrolls data for February, with analysts uncertain how much payback there might be for January's outsized jump. There was also a chance the jobless rate could fall by more than forecast given the recent strength in employment.
The numbers are still likely to highlight the relative outperformance of the US economy, especially against the European Union, and further encourage dollar bulls.
The greenback reached a new 2019 high against a basket of currencies, before steadying at 97.537.
The euro cowered at $1.1198, having suffered its biggest one-day loss against the dollar since June 2018 when the ECB last pushed back plans for a rate hike.
The euro also shed over 1 per cent on the yen overnight and was last trading at 124.57 yen. The safe-harbour Japanese currency was one of the few to hold its own on the dollar, firming to 111.28.
“The ECB's updated forecasts imply that, at best, growth slowly returns to trend over the next few years, meaning it will be very difficult to get underlying inflation up,” wrote analysts at ANZ in a note.
“Euro interest rates could be at current levels into 2021. That is not good news for euro area banks or the euro.”
In commodity markets, the rise in the dollar restrained gold to $1,287.86 per ounce.
Oil prices eased as US crude output and exports climbed to record highs, undermining efforts by producer club OPEC to tighten global markets.
US crude was last down 38 cents at $56.28 a barrel, while Brent crude fell 49 cents to $65.81.