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- Asian stocks fell on Wednesday as fears of an entrenched global economic slowdown gripped investors, underlined by a weak factory survey from China, while the greenback firmed as investors fled to relatively safe-haven assets. More evidence of an entrenched slowdown was evident as activity in China’s factory sector shrank at a faster pace than expected in September, falling to its weakest level in 6-1/2 years as domestic and export demand continued to slump, a private survey showed. China’s stock markets took the weak data on the chin with main indices down between 2-3 percent in opening trades. Japanese markets are shut through Wednesday. Fresh cracks in the commodities complex, amplified by drops in copper, raised concerns that a China-led slowdown may pose significant headwinds for riskier assets, particularly global equities. On Tuesday, the Asian Development Bank lowered its growth forecast for China to 6.8 percent for 2015.
- The Federal Reserve’s decision to delay raising interest rates for the first time since the 2008 financial crisis will likely encourage companies to take out more debt to repurchase their own shares or issue special dividends before the end of the year, adding to the almost $1 trillion that companies were already on pace to return to investors this year, fund managers and analysts say. That’s because, with historically low interest rates now likely to extend to at least December, companies are “now in a sort of borrowing nirvana,” said a bond strategist, who asked not to be quoted by name because he recently left one firm and has not yet officially started at his new position.
- Oil prices dipped on Wednesday, reversing early gains, as weak economic data from China weighed on commodities and added to the woes of an oversupplied market that has seen prices more than halve since June 2014. Crude edged up in early Asian trading after industry group the American Petroleum Institute reported that U.S. crude stockpiles fell 3.7 million barrels last week, with stocks at the Cushing, Oklahoma, delivery point for U.S. crude futures alone down almost 500,000 barrels. But the rise did not last as more weak data from China and tumbling commodities like coal and copper weighed on oil. Activity in China’s factory sector unexpectedly shrank to a 6-1/2-year low in September, a private survey showed, raising fears of a sharper slowdown in the world’s second-largest economy that could spell more turmoil for financial markets. The preliminary Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI) fell to 47.0 in September, marking seven straight months of declines and the worst reading since March 2009 as well as below market expectations of 47.5. Levels below 50 signify a contraction