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Asian Stocks Follow U.S. Tech Slump, Nikkei Down 2%

Asian Stocks Follow U.S. Tech Slump, Nikkei Down 2%

Asian Stocks registered notable declines on Thursday. That largely as a consequence of regional technology stock underperformance. Which mirrored the preceding day’s downturn in their U.S. counterparts. This downturn was further exacerbated by a significant upsurge in bond yields. That and coupled with a degree of ambiguity surrounding Japanese monetary policy. thus resulting in the Nikkei index in Japan posting the most substantial losses.

In the prior session, Wall Street indices concluded on a bearish note. Driven primarily by an abrupt increase in Treasury yields. A factor that induced investors to largely overlook commendable earnings reports from Meta Platforms Inc (NASDAQ:META) and IBM (NYSE:IBM). Alphabet Inc (NASDAQ:GOOGL), the parent company of Google. Also encountered substantial losses, plummeting by nearly 10% following a disappointing third-quarter earnings performance.

These developments cast a shadow over Asian markets. In particularly affecting Japan’s Nikkei 225. Which recorded significant losses as local technology stocks reversed their recent gains. Other technology-laden indices, including South Korea’s KOSPI and Hong Kong’s Hang Seng, similarly bore the brunt, witnessing steep declines ranging from 0.7% to 2.2%. That notwithstanding data revealing superior-than-anticipated third-quarter economic growth in the case of KOSPI.

The Nikkei, in the morning Asian Stocks trading session, experienced a 2.1% decline, positioning itself as one of the most underperforming constituents in the Asian market for the day. Prominent technology firms such as Advantest Corp. (TYO:6857), Tokyo Electron Ltd. (TYO:8035), and SoftBank Group Corp. (TYO:9984) – which had previously demonstrated robust performance earlier in the week – were the most pronounced decliners within the index.

Asian stocks React to Bond Yields and Yen Depreciation

A notable 2% surge in Japanese 10-year bond yields perturbed the local equities, as Asian stocks reacted to the situation. This reaction mirrored the yen’s depreciation below the 150 level, nearing a 33-year nadir.

The rapid rise in yields and yen depreciation raised concerns of the Bank of Japan considering tightening its monetary stance during its upcoming meeting, as earlier media reports indicated possible adjustments to its yield curve control policy. This development comes in response to mounting pressures from debt and currency markets.

Also Read: Asian FX Calm Amid PMI Boost, Aussie Rises on Rate Hike Bets

Furthermore, the resumption of the ascent in U.S. Treasury yields toward multi-year highs fostered unease across broader Asian stocks, prompting Asian investors to adopt a cautious posture in anticipation of the forthcoming Federal Reserve meeting. Concurrently, Asian market participants awaited with interest the release of crucial U.S. third-quarter gross domestic product data scheduled for later in the day.

Market Snapshot: ASX 200 Down, Azure Minerals Surges, Indian Tech Concerns, and China’s Economic Worries

The ASX 200 in Australia descended by 1%, influenced in part by data signaling a protracted decline in export prices throughout the third quarter. Heightened expectations of an interest rate increase by the Reserve Bank further exacerbated sentiment within Australian equities. Nevertheless, Azure Minerals Ltd (ASX:AZS) emerged as a rare bright spot in the Australian market. Registering a 43% rally after disclosing its acceptance of a takeover offer valued at A$1.6 billion ($1 billion) from Chile’s SQM (SN:SQMA), the world’s preeminent lithium producer.

Futures contracts for India’s Nifty 50 index pointed toward a substantially weaker opening in Asian stocks. Reflective of its substantial exposure to U.S. technology equities. Indian stocks had been notably impacted in recent times by a combination of profit-taking and investor reticence toward the technology sector.

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indices posted declines of 0.7% and 0.4%. Respectively, on Thursday, following a notable recovery from their 2023 lows earlier in the week. Although the initial enthusiasm surrounding news of augmented stimulus spending in China. Which prompted by the government’s announcement of a 1 trillion yuan ($136 billion) bond issuance. Which spurred a robust market rebound earlier in the week. Persistent concerns relating to languid economic growth and the potential for a property market debt crisis continued to weigh on Chinese equities.

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Please note that this article serves solely for informational purposes. As such, it is not financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.


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