Asia’s major stock indexes plunged on Wednesday in the wake of a tech-led Wall Street sell-off sparked by fears of a downturn in the world’s No1 economy.
Shares across the region tumbled, while oil prices hit multi-month lows, as soft US manufacturing data reignited fears of a hard landing.
Leading the retreat was Japan’s Nikkei share average, which fell more than 4%, as its chip-related stocks followed the likes of AI darling Nvidia into the red.
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The Nikkei closed 4.24% lower at 37,047.61, marking its lowest close since August 15 and biggest decline since August 5. The broader Topix fell 3.65% to 2,633.49.
The Nikkei fell more than 12% to 31,458.42 on August 5 in its biggest decline since Black Monday amid US recession fears and a sharply stronger yen. On Wednesday, a stronger yen also weighed on local equities, many of which are exporters.
Wall Street closed sharply lower on Tuesday, with Nvidia tumbling nearly 10% as investors reined in their enthusiasm about artificial intelligence. Market sentiment was also hit as Institute for Supply Management data showed US manufacturing remained subdued.
In Japan, chip-related giants tracked Nvidia lower, with Tokyo Electron and Advantest shedding 8.55% and 7.74%, respectively.
China and Hong Kong shares also dropped, following the overnight sell-off in technology sector stocks in New York.
Risk appetite was further diminished by China’s slowing services sector and heightened trade tensions with Canada. The blue-chip CSI 300 index declined 0.65%, while the Shanghai Composite Index dipped 0.67%, or 18.70 points, to 2,784.28.
The Hang Seng Index lost 1.10%, or 194.15 points, to 17,457.34 as tech shares in both markets were hit hard, especially after Nvidia’s stock plunged by 9.53% overnight.
Energy stocks also saw notable declines, leading both Shanghai’s and Hong Kong’s markets lower as oil prices continued to fall. Hong Kong’s energy index dropped 4.5% and China’s CSI energy index decreased by 2.2%.
Elsewhere across the region, in earlier trade, Seoul and Taipei dived more than 3%. Sydney, Singapore and Manila gave back more than 1% and Wellington was also down.
MSCI’s broadest index of Asia-Pacific shares outside Japan was last 1.8% lower.
US Dollar Rebounds
US stock futures meanwhile extended declines. S&P 500 futures eased 0.55%, while Nasdaq futures shed 0.74%. Eurostoxx 50 futures slid more than 1% and FTSE futures declined 0.75%.
Concerns over the sluggish outlook in China – the world’s biggest oil importer – and worries over a global slowdown in turn further exacerbated the decline in oil prices due to expectations of weakening demand.
Brent crude futures bottomed at $73.14 a barrel on Wednesday while US crude hit a trough of $69.72, both their lowest levels since December. They had fallen nearly 5% in the previous session.
A slew of US economic data is due this week, including figures on job openings, jobless claims and the closely watched non-farm payrolls report out on Friday.
Given the Federal Reserve’s labour market focus, Friday’s release could decide whether a rate cut expected this month will be regular or super-sized.
Ahead of the releases, moves in currencies and US Treasuries were less dramatic than those seen in equities, though safe-haven currencies like the dollar and the yen were buoyed by safety bids.
The yen was last 0.2% higher at 145.15 per dollar, while a rebound in the greenback pushed the euro further away from a 13-month high. The common currency last bought $1.1057.
The Australian dollar was on the defensive, falling 0.12% to $0.67035, further pressured by weakness in commodity prices and as data on Wednesday showed Australia’s economy stuck in the slow lane last quarter.
The benchmark 10-year US Treasury yield fell nearly two basis points to 3.8253%, while the two-year yield fell more than three bps to 3.8528%.
Key figures
Tokyo – Nikkei 225 < DOWN 4.24% at 37,047.61 (close)
Hong Kong – Hang Seng Index < DOWN 1.10% at 17,457.34 (close)
Shanghai – Composite < DOWN 0.67% at 2,784.28 (close)
London – FTSE 100 < DOWN 0.63% at 8,245.89 (0932 BST)
New York – Dow < DOWN 1.51% at 40,936.93 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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