Asian stocks were in retreat on Wednesday with investor mood low in the wake of lacklustre earnings from US tech behemoths Tesla and Alphabet.
China’s continuing economic struggles and the absence of a clear escape plan from Beijing, along with the looming threat of an intensified trade war if Donald Trump returns to the White House, also weighed on sentiment.
Japan’s Nikkei share average closed lower for a sixth consecutive session, as the yen’s continued rally impacted big exporter’s fortunes.
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The Nikkei fell 1.11% to a one-month closing low of 39,154.85, also marking its longest losing streak since October 2021. The broader Topix slid 1.42% to 2,793.12.
While Alphabet beat second-quarter earnings estimates, Tesla reported its lowest profit margin in more than five years and missed estimates, unsettling markets across the Pacific.
Meanwhile, the yen rallied to a seven-week high of 154.36 per dollar on Wednesday, as markets priced in a 56% chance of a rate hike at the Bank of Japan’s July 30-31 monetary policy meeting.
Uniqlo parent Fast Retailing fell 0.8%, chip-making equipment giant Tokyo Electron was down 0.9%, and silicon wafer maker Shin-Etsu Chemical declined 2.3% to become the biggest drags on the Nikkei.
Chinese stocks struggled too as investors turned risk-averse amid weak economic data and looming US election risks.
The Shanghai Composite index dipped below the crucial 2,900 mark in morning trade. It pared back some of its losses but was still down 0.46%, or 13.42 points, at 2,901.95, at the close. The Shenzhen Composite Index on China’s second exchange dropped 1.32%, or 20.66 points, to 1,546.29.
China’s blue-chip CSI300 index fell by 0.63%, influenced by an early 0.21% dip in its financial sector sub-index, a 0.37% decrease in consumer staples, a hefty 1.48% drop in real estate and a 0.09% decline in healthcare.
Hong Kong stocks also experienced declines, weighed down by electric vehicle makers following those disappointing second-quarter results from Tesla. Notably, Nio and Xpeng dropped by 3.9% and 4.9%, respectively.
US Dollar Index Flat
The Hang Seng Index lost 0.91%, or 158.31 points, to close at 17,311.05 and Chinese H-shares in Hong Kong – stocks belonging to companies from the Chinese mainland – declined by 0.51% to 6,163.37,
Elsewhere across the region, in earlier trade, Sydney, Seoul, Mumbai, Singapore and Jakarta all slipped, though Wellington edged up. Manila and Taipei were closed because of a typhoon.
The dour mood was set to move to Europe, with Eurostoxx 50 futures down 0.65%, German DAX futures down 0.44% and FTSE futures 0.3% lower ahead of a slew of earnings from companies in the region.
Investor focus will be on European luxury stocks after the world’s biggest luxury group LVMH reported slowing sales growth as Chinese shoppers lower their spending.
On the macro side, investors await US GDP data on Thursday and PCE data – the Fed’s favoured measure of inflation – on Friday to gauge the expectations of interest rate cuts this year.
Markets are pricing in 62 basis points of easing this year, with a cut in September priced in at 95%, the CME FedWatch tool showed.
The dollar index, which measures the US currency against six rivals, was little changed at 104.41. The index is down 1.3% this month.
In commodities, oil prices rose on easing US crude inventories. Brent crude futures for September rose 0.28% to $81.24 a barrel, while US West Texas Intermediate crude for September gained 031% to $77.2 per barrel.
Key figures
Tokyo – Nikkei 225 < DOWN 1.11% at 39,154.85 (close)
Hong Kong – Hang Seng Index < DOWN 0.91% at 17,311.05 (close)
Shanghai – Composite < DOWN 0.46% at 2,901.95 (close)
London – FTSE 100 < DOWN 0.46% at 8,130.19 (0934 BST)
New York – Dow < DOWN 0.14% at 40,358.09 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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