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On Friday, a majority of Asian Stock Decline, retracting from significant gains earlier in the week. Notably, Chinese technology stocks faced substantial losses after Alibaba disclosed the impact of recent U.S. restrictions on chip exports.
Regional markets took a restrained cue from Wall Street, concluding a rather subdued earnings season with limited positive developments. Additionally, less-than-robust jobless claims data suggested a further slowdown in the U.S. economy. An overnight surge in U.S. Treasury yields added pressure to stock markets.
Hang Seng Index Drops 1.6% as Alibaba Faces Tech Challenges
Hong Kong’s Hang Seng index emerged as the most affected. Experiencing a 1.6% decline primarily attributed to substantial losses in locally-listed Chinese technology stocks. Alibaba Group, as the largest decliner on the index, plummeted 10% to a one-year low after abandoning the planned spin-off and listing of its cloud unit. The decision prompted by uncertainties surrounding the supply of chips essential for artificial intelligence development. Following the recent expansion of the U.S. chip export ban to cover AI-related materials.
Asian Stock Decline: BAT Trio’s Declines and Market Impact Amid U.S.-China Talks
This development underscored a common challenge for other Chinese firms. Including Baidu Inc and Tencent Holdings Ltd, both of which, along with Alibaba, constitute the BAT trio. These stocks experienced declines of 5.4% and 1.7%, respectively, with Tencent having issued warnings similar to Alibaba’s earlier in the week.
The impact of the technology sector’s losses extended to China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes. Which fell by 0.5% and 0.3%, respectively.
High-level discussions between U.S. and Chinese leaders did not provide substantial support for the markets. Although the nations agreed to reopen military communications, President Joe Biden’s reference to his Chinese counterpart Xi Jinping as a “dictator” somewhat tempered sentiment over their meeting.
Asian Markets Decline: Impact of Chinese Tech Weakness, Nikkei’s Resilience
The weakness in Chinese tech stocks spilled over into other Asian stock Decline, with South Korea’s KOSPI dropping by 0.7%, and Australia’s ASX 200 experiencing a slight decline. Futures for India’s Nifty 50 index indicated a marginally weaker opening.
Also Read: Asian Markets Trends: Strong Anticipated and Data Releases
Japan’s Nikkei 225 remained flat as Bank of Japan Governor Kazuo Ueda emphasized the necessity for ultra-loose policy, particularly following data revealing a more significant contraction in Japan’s economy than anticipated in the third quarter. Despite these economic indicators, the Nikkei was poised to register a 2.7% gain for the week, marking its third consecutive positive week. The anticipation of a dovish Bank of Japan stance kept investors largely optimistic about Japanese stocks.
While many other Asian markets were on track for weekly gains, driven by softer-than-expected U.S. inflation data, uncertainty persisted regarding the timing of the Federal Reserve’s decision to begin trimming rates.
