Asian Stocks Fall as US Economic Worries Hit Tech Shares
Asian stock markets started the week on a downward trend, led by a sharp drop in technology stocks such as Asia Pacific Index, amid concerns over the health of the US economy.
The Morgan Stanley Capital International (MSCI) Asia Pacific Index fell as much as 1.8% to the lowest in three weeks, with heavyweights such as Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. dragging the index down.
The Nikkei 225 fell more than 3% before cutting its losses after the yen reversed some of last week’s big rise. In Taiwan, the key stock measure dropped 2%, while in Hong Kong, markets set their sights on a fifth consecutive day of losses.
The fall in Asian tech stocks comes after disappointing US payroll data last Friday raised concern the Federal Reserve may be behind the curve in trying to jumpstart the US economy. With a decision on US interest rates due next week from the Fed, there is also uncertainty building over the extent of the widely expected rate cut.
Meanwhile, the Bank of Japan’s recent tightening monetary policy measure pushed up the value of the yen, adding to worries over the effect it had on global carry trades – in which investors borrow in lower-yielding currencies to invest in higher-yielding assets.
“There is scope for some more short-term downside for risk assets as positions are likely to unwind,” said Matthew Haupt, a portfolio manager at Wilson Asset Management International. “Expect most weakness in Japan at this stage with all markets to suffer as well,” he added.
Asian stocks’ economic slowdown continues to weigh heavily on the market sentiment. Tech stocks declining have become a common trend as the broader economic concerns across the region linger.
Chinese Markets, Economic Data Fuel Concerns
Chinese stocks also faced declines, weighed down by weak economic data that pointed to ongoing deflationary pressures. Both producer and consumer prices fell, indicating that China’s economy is still struggling to gain momentum. This follows a series of recent downgrades of Chinese stocks as weak economic indicators raise doubts over the country’s ability to meet its 5% GDP growth target for 2024. The Taiwan semiconductor stock forecast has also seen adjustments amid these uncertain conditions.
Investors across Asia are left in the fix of mixed signals emanating from both the global and domestic markets. Although still concerned by the speed at which the US Federal Reserve would move to steady the economy, local factors, such as tighter monetary policy in Japan, and weak economic data in China’s case, also weighed on market sentiment lower.
Markets will most likely continue to be turbulent as the week wears on, with investors realigning their positions in response to changing economic fortunes. The tech stocks decline reflects broader market apprehensions about both the regional and global economic outlook.
Asian markets, Asia Pacific Index, are likely to remain under pressure until there is better clarity on the course of US monetary policy in the near future and the onset of China’s economic data stabilization. For now, the focus would be on risk management in a no-clear-direction environment and the challenges brought about by both the global and regional economic dynamics.
Inside Telecom provides you with an extensive list of content covering all aspects of the tech industry. Keep an eye on our Tech sections to stay informed and up-to-date with our daily articles.