Asian stocks slipped on Thursday, weighed down by sliding tech shares and with investors unimpressed by Beijing’s plans to support its stumbling economy.
China on Wednesday pledged to make its private economy “bigger, better and stronger” with a series of policy measures designed to bolster its flagging post-pandemic recovery but many observers weren’t won over.
That air of gloom fed the mood across the region and Japan’s Nikkei share average fell after two straight sessions of advances, as chip stocks sank in line with US peers, eclipsing gains for automakers amid a weaker yen.
The Nikkei share average fell 1.23%, or 405.51 points, to close at 32,490.52, while the broader Topix was down 0.79%, or 18.07 points, to 2,260.90.
Also on AF: Chinese Carmakers Grab Half of Russia’s Auto Market
That followed a 1.6% rise over the previous two sessions that brought it just below the key psychological 33,000 mark, where the closely watched 25-day moving average also sits.
The Nikkei’s decline was exaggerated by tumbles for heavily weighted chip stocks, with Advantest and Tokyo Electron combining to shave 98 points from the index.
Chinese and Hong Kong stocks dropped as the government’s vow to support the private economy failed to excite investors.
And the BofA became the latest bank to cut China’s economic growth forecast for this year to 5.1% on a disappointing second-quarter GDP growth and potential delay in forceful policy response.
The bank also said its latest Asia Fund Manager Survey shows that expectations for China lack hope, with a majority (57%) of investors bracing for new lows in China equities, undershooting the October-2022 lows.
Meanwhile, China’s yuan shot up after authorities tweaked cross-border financing rules and major state-owned banks were seen selling dollars in moves analysts said were designed to shore up the currency.
The Shanghai Composite Index dropped 0.92%, or 29.31 points, to 3,169.52, while the Shenzhen Composite Index on China’s second exchange retreated 1.05%, or 21.44 points, to 2,015.65. Artificial intelligence stocks led the onshore market’s decline by slumping 2.9%.
The Hang Seng Index edged back 0.13%, or 24.29 points, to 18,928.02 despite reports Chinese authorities were weighing up easing home buying restrictions in the country’s biggest cities.
The Hang Seng China Enterprises Index fell 0.28%, while the Hang Seng Tech Index was down 1.24%, after rising as much as 1.5%.
Elsewhere across the region, in earlier trade, Seoul, Bangkok and Wellington fell, though there were small gains in Sydney, Mumbai, Singapore, Manila and Jakarta.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.23% higher, on course to snap its three day losing streak.
ECB Rate Hike Expected
Futures indicated that European stock markets were set for a lower open, with Eurostoxx 50 futures down 0.16%, German DAX futures down 0.11% and FTSE futures down 0.13%.
The Bank of England is due to meet in the first week of August but before that central bank meetings in Japan, Europe and the United States will likely grab investors’ attention.
Traders and analysts expect the European Central Bank to raise its benchmark rate by 25 basis points next week but what comes after that has been up for debate in the wake of recent dovish tone taken by the central bank’s policymakers.
Bank of Japan Governor Kazuo Ueda said this week there was still some distance to sustainably and stably achieving the central bank’s 2% inflation target, dousing speculation of a hawkish policy shift next week.
Markets seem a lot more certain of the Federal Reserve’s next steps, with traders expecting a 25 basis point hike but no more after that.
US futures fell in Asian trade, with E-mini futures for the S&P 500 0.15% lower and Nasdaq futures down 0.44% after earnings from streaming giant Netflix and EV maker Tesla.
Netflix disappointed Wall Street on Wednesday with second-quarter revenue that fell short of analyst estimates, while Tesla reported quarterly automotive gross margin in line with Wall Street estimates, though it was a far cry from a year earlier.
Key figures
Tokyo – Nikkei 225 < DOWN 1.23% at 32,490.52 (close)
Hong Kong – Hang Seng Index < DOWN 0.13% at 18,928.02 (close)
Shanghai – Composite < DOWN 0.92% at 3,169.52 (close)
London – FTSE 100 > UP 0.73% at 7,643.36 (0934 GMT)
New York – Dow > UP 0.31% at 35,061.21 (Wednesday close)
- Reuters with additional editing by Sean O’Meara
Read more:
Investors Load Up Bullish Bets on China After Growth Setback
China Digital Yuan Transactions Surge to $249.33 Billion
Nikkei Gains as BoJ Stands Firm, Hang Seng Dips on China Data
