Asia stocks continued to plunge on Tuesday, dragged down by plummeting tech shares which saw Hong Kong’s Hang Seng hit an 11-year low.
Tech firms took a hit again after US President Joe Biden announced a new set of export controls last week aimed at, he said, keeping US tech out of the hands of China’s military.
The move saw tens of billions of dollars wiped off the value of chip sector shares in numerous countries, particularly Chinese chipmakers and their suppliers.
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The tech sell-off also saw Japanese shares record their worst day in more than two weeks, although travel-related companies remained firm on the day that Japan re-opened its borders to regular tourism.
The Nikkei share average fell 2.64% after returning to trade from a three-day weekend. It opened well below the 27,000 level and extended losses to close at 26,401.25. The broader Topix index fell 1.9%, its worst day since September 26.
The new US curbs weighed on Japanese companies involved in semiconductor production. Chipmaking equipment manufacturer Tokyo Electron dropped 5.5% and industrial robot maker Fanuc Corp fell 3.9%.
Meanwhile, Hong Kong’s stock benchmark fell below 17,000 points for the first time in 11 years, after China vowed to stick to its zero-Covid policy, adding to slowdown concerns from those US tech crackdowns.
The Hang Seng Index dropped 2.23%, or 384.30 points, to close at 16,832.36 and the Hang Seng China Enterprises Index declined 2.6%.
Tech giants listed in Hong Kong tumbled 3%, with food-delivery giant Meituan down 6.1% to become the biggest drag on the Hang Seng. Video platform Bilibili plunged more than 10%.
Chip Giant TSMC Slumps
China stocks, however, edged up after a four-session losing streak, lifted by new energy shares as industry players expect robust Q3 earnings.
That was despite more falls for its semiconductor makers who dropped 1% – but, China’s electric vehicle battery industry leader CATL surged 5.3%, as it expects net profit in the July-September quarter to nearly triple from a year-ago period.
The Shanghai Composite Index gained 0.2%, or 5.65 points, to 2,979.79, while the Shenzhen Composite Index on China’s second exchange rose 0.6%, or 11.50 points, to 1,882.00.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.8% to a two-year low.
Elsewhere across the region, stock markets fell with investors worried about rising interest rates and an escalation in the Ukraine war.
Shares in the Philippines, though, rose 1% while those in Taiwan – where Taiwan’s Semiconductor Manufacturing Co slumped 8% – fell 3.9%. Indian stocks were down with Mumbai’s signature Nifty 50 index slipping 0.88%, or 150.95 points, at 17,090.05.
Treasury Yields Jump
Globally, bonds have been sideswiped by the rout in gilts, amid fears pension funds were forced into fire sales and British promises of more tax details and extra emergency measures.
The Bank of England (BOE) on Tuesday expanded its emergency bond purchase programme to include inflation-linked gilts.
Treasury yields jumped when trading resumed after Monday’s US holiday, with 30-year yields up as much as 11 basis points to an almost nine-year high of 3.959% on Tuesday.
The backdrop of the bond market rout is ever higher interest rates. Nerves are fraying ahead of Thursday’s release of US inflation data, which could set the stage for another big hike from the Federal Reserve in November.
“Inflation is stubborn, and the Fed needs to go beyond, above beyond what the market is expecting,” said Tai Hui, chief Asia-Pacific market strategist at JPMorgan Asset Management.
Yen’s Struggles Continue
Futures pricing shows traders are positioned for about a 90% chance of a 75 basis point Fed hike next month and for the Fed funds rate to hit 4.5% by February and stay there most of 2023.
That outlook is giving dollar bulls another run and has the greenback drifting toward the milestone highs it scaled last month.
The Japanese yen, at 145.78 per dollar, was within a few pips of the level that prompted official support a couple of weeks ago.
Brent crude fell marginally to $95.85 a barrel. Spot gold fell 0.07% to $1,666 an ounce.
Key figures
Tokyo – Nikkei 225 < DOWN 2.64% at 26,401.25 (close)
Hong Kong – Hang Seng Index < DOWN 2.23% at 16,832.36 (close)
Shanghai – Composite > UP 0.19% at 2,979.79 (close)
London – FTSE 100 < DOWN 1.14% at 6,880.05 (1015 BST)
New York – Dow < DOWN 0.32% at 29,202.88 (Monday close)
- Reuters with additional editing by Sean O’Meara
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