Asian share indexes were in retreat on Friday as worries over a US slowdown and China’s uneven recovery dominated the mood on trading floors.
Stocks across the region slipped towards their worst week in a month-and-a-half while bonds enjoyed their best day in weeks as US data and earnings showed signs of weakness.
Japan’s Nikkei share average dropped, easing away from an eight-month peak it touched earlier in the session, as investors stayed on the sidelines ahead of the Bank of Japan’s policy meeting next week.
Also on AF: US Has No Plan to ‘Decouple’ with China, Yellen Says
The index closed 0.33% lower at 28,564.37, after rising to 28,778.37, its highest level since August 26. The index was still on course for its fourth straight month of gains – the last time it went on a similar run was in 2021.
The broader Topix ended the day down 0.23% at 2,035.06, but clocked its second straight week of gains.
Corporate governance in Japan has suddenly become a hot topic, rousing the stock market out of decades of lethargy, with foreign investors purchasing roughly 1.59 trillion yen worth of Japanese shares last week, their biggest buying in five years.
The BOJ is scheduled to hold a two-day meeting next week. Nearly 90% of economists polled by Reuters said the central bank’s new chief Kazuo Ueda will not start unwinding its ultra-easy policy at the meeting.
China and Hong Kong stocks fell as well, led by artificial intelligence (AI) and tech equities, as China’s uncertain economic recovery kept market sentiment subdued.
AI, Tech Shares Lead Decline
Some brokers are also worried the market hype over AI themes may soon end and that saw the Shanghai Composite Index slip 1.95%, or 65.77 points, to 3,301.26, while the Shenzhen Composite Index on China’s second exchange fell 2.45%, or 51.84 points, to 2,066.10.
Meanwhile, Hong Kong’s benchmark Hang Seng Index was down 1.57%, or 321.24 points, to 20,075.73, while the China Enterprises Index slipped 0.8%.
AI and information technology shares led Friday’s decline, with the CSI AI and Info Tech indexes down 5.4% and 4.5%, respectively.
Elsewhere across the region, in early trade, Mumbai, Sydney, Seoul, Singapore, Wellington and Taipei all fell.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.9% and was down 1.7% for the week so far, its worst performance since bank stability worries gripped markets in the middle of March.
US Treasuries Rally
Figures on Wednesday showed more Americans filing claims for jobless benefits and manufacturing activity in the mid-Atlantic region slumping to its lowest level in nearly three years.
On the heels of other signals that the world’s biggest economy is slowing down, the data helped drag Brent crude futures, a bellwether for global activity, down 6% for the week, the sharpest drop in about a month.
US Treasuries have also rallied, with two-year yields extending Thursday’s drop as investors turn for safety and bet the US hiking cycle is all but over. Yields fall when prices rise. Two-year yields fell 4 bps to 4.128%.
The US Leading Economic Index, a gauge of future economic activity, also dropped to its lowest level since November 2020 overnight and it is signalling a recession starting mid-2023.
The slowdown signals have also weighed on the US dollar as traders bet on some 50 bps in US rate cuts this year – though in a quiet Asia session the dollar steadied.
Elsewhere the mood dragged on bitcoin, which is back below $30,000, while the fall in yields has gold, which pays no income, straddling $2,000 an ounce.
In commodity markets traders are closely watching for producers’ and buyers’ response to Chilean plans to nationalise the lithium industry. Chile holds the world’s largest reserves.
Key figures
Tokyo – Nikkei 225 < DOWN 0.33% at 28,564.37 (close)
Hong Kong – Hang Seng Index < DOWN 1.57% at 20,075.73 (close)
Shanghai – Composite < DOWN 1.95% at 3,301.26 (close)
London – FTSE 100 > UP 0.02% at 7,904.40 (0934 GMT)
New York – Dow < DOWN 0.33% at 33,786.62 (Thursday close)
- Reuters with additional editing by Sean O’Meara
Read more:
Dollar-Hungry Mainland China Funds Head For Hong Kong
China Becoming More Rival Than Partner: Germany’s Baerbock
India Expects Apple to Triple Investment After Cook-Modi Meet
