Asian stocks continued their slide on Wednesday despite optimism the US Federal Reserve will at last call a halt to its long inflation campaign soon.
Poor earnings reports and tech worries, along with persistent concerns over China’s post-Covid recovery, trumped any reasons to be cheerful over interest rates turning around.
Japan’s Nikkei share average ended lower in a listless day of trading as investors continued to sell stocks to book profits after last week’s rally.
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The Nikkei index fell 0.26% to close at 33,321.22 after opening 0.49% lower and trading in positive territory earlier in the session. The broader Topix fell 0.51% to 2,364.50, dragged by banking shares.
The banking index lost 2.54%, with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group sliding 2.83% and 2.63%, respectively.
China and Hong Kong stocks fell, as food delivery giant Meituan’s cautious fourth-quarter guidance raised market concerns about the prospects for China’s consumer spending recovery.
The Hang Seng Index heavyweight slumped 11% after the firm said it expected fourth-quarter revenue growth for its core food delivery business to slow versus the preceding quarter, citing persistent consumer caution and warmer weather for the winter season hitting orders as reasons.
Hong Kong’s Hang Seng Index dropped 2.08%, or 360.70 points, to 16,993.44, and the Hang Seng China Enterprises Index lost 2.32%. Hong Kong-listed mainland developers dropped 4.4%.
In mainland markets, real estate and insurance companies fell 2.6% and 2%, respectively, leading the decline, with general pessimism over China’s economic recovery weighing.
The blue-chip CSI 300 Index dropped 0.86%, while the Shanghai Composite Index fell 0.56%, or 16.87 points, to 3,021.69. The Shenzhen Composite Index on China’s second exchange retreated 0.78%, or 14.95 points, to 1,889.85.
Elsewhere across the region, in earlier trade, there were also losses in Seoul, Bangkok and Manila. Sydney, Singapore, Taipei, Mumbai, Bangkok and Jakarta edged up. Wellington was flat.
MSCI’s broadest index of Asia-Pacific shares outside Japan briefly hit a one-week high, before weakness in Hong Kong tech shares dragged it to a 0.3% loss.
Euro, Yen Gain on US Dollar
Treasury yields and the dollar hit multi-month lows after a Fed official made fresh hints of US interest rate cuts.
The euro, yen, sterling, Australian dollar, yuan, Swiss franc and a host of Asian emerging market currencies made fresh multi-month peaks on the dollar, while gold shot to a seven-month high above $2,501 an ounce.
Federal Reserve Governor Christopher Waller, an influential and previously hawkish voice at the US central bank, told the American Enterprise Institute on Tuesday that rate cuts could begin in a matter of months, provided inflation keeps easing.
Fed funds futures rallied on the remark to price more than hundred basis points (bps) of cuts in 2024 and a 40% chance they begin as soon as March. Two-year Treasury yields fell sharply and touched fresh lows in the Asia session.
The two-year yield hit its lowest since mid-July at 4.69% and the benchmark 10-year yield fell 6 bps to its lowest since September at 4.28%.
In commodities, Brent crude futures steadied at $81.63 a barrel ahead of a crucial OPEC+ meeting on Thursday to decide output policy in the next months, but prices were set for a monthly drop, while Singapore iron ore futures are up 9.6% in November at $130.50 a tonne.
Key figures
Tokyo – Nikkei 225 < DOWN 0.26% at 33,321.22 (close)
Hong Kong – Hang Seng Index < DOWN 2.08% at 16,993.44 (close)
Shanghai – Composite < DOWN 0.56% at 3,021.69 (close)
London – FTSE 100 < DOWN 0.13% at 7,445.90 (close)
New York – Dow > UP 0.24% at 35,416.98 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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