Asia’s major stock indexes tumbled on Wednesday after disappointing growth data out of China deepened worries about the world’s second largest economy.
Stocks across the region were headed for their steepest one-day percentage fall in over five months on news China’s economy grew 5.2% in the fourth quarter from a year earlier, missing analysts’ expectations.
China stocks hovered around five-year lows and Hong Kong shares tumbled to their weakest in 14 months, as it also emerged China’s December new home prices fell at the fastest pace since February 2015, marking the sixth straight month of declines.
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“China is undergoing an arduous economic restructuring that will witness the decline of many previously frothy sectors such as property. The stock market will fall as a result.” said Yang Tingwu, vice-general manager of asset manager Tongheng Investment.
China’s blue-chip CSI300 Index dipped 2.18%, while the Shanghai Composite Index dropped 2.09%, or 60.37 points, to 2,833.62. The Shenzhen Composite Index on China’s second exchange fell 2.54%, or 44.33 points, to 1,698.70.
Shanghai’s tech-focused STAR 100 Index slumped 1.9%, while the tourism sector lost 1.8%.
In Hong Kong, an index tracking mainland developers tumbled 4.1% to record lows as the benchmark Hang Seng Index hit its lowest level since November 2022, led by property and tech shares, diving 3.71%, or 589.02 points, to 15,276.90.
Japan’s Nikkei share average touched a fresh 34-year peak before retreating sharply to record a second straight session of losses.
The stock benchmark initially rallied as a weaker yen buoyed the outlook for corporate profits among its many exporters, while chip-related stocks tracked overnight gains for US peers, even as Wall Street’s three main indexes slumped.
However, the Nikkei fell back sharply mid-morning in Tokyo after pushing up as much as 1.83% to its highest level since February 1990 at 36,239.22.
The slide accelerated into the close, with the index ending down 0.40% at 35,477.75, just above the day’s low. The broader Topix was down 0.30%, or 7.60 points, to 2,496.38.
UK Inflation Data
Overnight, the yen slumped against a resurgent dollar and all three main Wall Street indexes declined after Federal Reserve Governor Christopher Waller suggested market expectations for US interest rate cuts were overdone.
Elsewhere across the region, Indian stocks slipped with Mumbai’s signature Nifty 50 index down 2.09%, or 460.35 points, at 21,571.95. Seoul’s Kospi benchmark fell 2.47% MSCI’s broadest index of Asia-Pacific shares outside Japan slid 1.8%.
European stocks were set for a sharply lower open, with the Eurostoxx 50 futures down 0.67%, German DAX futures down 0.55% and FTSE futures 0.71% lower.
Investor focus during European hours will be on inflation data from Britain and the euro zone that could influence the outlook for the central banks’ monetary policies.
Investor enthusiasm was also dampened by the hawkish rhetoric from central bank officials, pushing back against expectations of early rate cuts.
US Federal Reserve Governor Christopher Waller said on Tuesday that while inflation was approaching the central bank’s 2% goal, the Fed should not rush to lower interest rates until lower inflation can clearly be sustained.
Red Sea, Gaza Distracts
Waller’s comments echoed sentiments of European central bankers. Markets are pricing in a 65% chance of a rate cut by the Fed in March, according to the CME FedWatch tool, compared with the 81% likelihood at the start of the week.
Geopolitical worries have also sapped sentiment as investors keep an eye on developments in the Red Sea, Gaza and Ukraine.
In currency markets, the dollar index, which measures the US currency against six rivals, rose 0.174% and touched a fresh one-month high of 103.51.
The Japanese yen weakened 0.31% to 147.64 per dollar, while the euro last fetched $1.0862. Sterling eased 0.2% to $1.26105.
In commodities, oil prices fell on the China data. US crude fell 0.69% to $71.90 per barrel and Brent was at $77.81, down 0.61% on the day.
Key figures
Tokyo – Nikkei 225 < DOWN 0.40% at 35,477.75 (close)
Hong Kong – Hang Seng Index < DOWN 3.71% at 15,276.90 (close)
Shanghai – Composite < DOWN 2.09% at 2,833.62 (close)
London – FTSE 100 < DOWN 1.64% at 7,434.07 (0934 GMT)
New York – Dow < DOWN 0.62% at 37,361.12 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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