Asian stocks experienced a downturn on Wednesday, despite positive expectations that the US Federal Reserve would soon end its prolonged inflation campaign. The market sentiment was overshadowed by disappointing earnings reports, tech-related worries, and ongoing uncertainties regarding China’s post-Covid recovery.
In Japan, the Nikkei share average closed lower in a subdued trading session, with investors opting to sell stocks to secure profits following the previous week’s rally. The Nikkei index dropped by 0.26% to 33,321.22, and the broader Topix of Asian stocks fell 0.51% to 2,364.50, primarily influenced by declines in banking shares. The banking index experienced a 2.54% loss, with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group sliding 2.83% and 2.63%, respectively.
In Hong Kong, the Hang Seng Index declined by 2.08% to 16,993.44, with the Hang Seng China Enterprises Index losing 2.32%. Meituan, a major Hang Seng Index constituent, faced an 11% slump after issuing a cautious fourth-quarter guidance, expressing concerns about China’s consumer spending recovery. The company anticipated a slowdown in fourth-quarter revenue growth for its core food delivery business, citing persistent consumer caution and warmer weather affecting winter-season orders.
On mainland markets, real estate and insurance companies experienced declines of 2.6% and 2%, respectively, contributing to the overall pessimism regarding China’s economic recovery. The blue-chip CSI 300 Index dropped by 0.86%, and the Shanghai Composite Index fell by 0.56%.
Elsewhere in the region, Seoul, Bangkok, and Manila witnessed losses, while Sydney, Singapore, Taipei, Mumbai, Bangkok, and Jakarta saw marginal gains.
MSCI’s broadest index of Asia-Pacific shares outside Japan briefly touched a one-week high before being pulled down by weakness in Hong Kong tech shares, resulting in a 0.3% loss.
Amidst these market movements, various currencies, including the euro, yen, sterling, Australian dollar, yuan, Swiss franc, and several Asian emerging market currencies, reached multi-month peaks against the US dollar. This followed comments from Federal Reserve Governor Christopher Waller, suggesting potential interest rate cuts in the coming months if inflation continues to ease. Treasury yields and the dollar hit multi-month lows in response to the remarks. Gold also surged to a seven-month high above $2,501 an ounce.
In the commodities market, Brent crude futures stabilized at $81.63 a barrel ahead of the crucial OPEC+ meeting on Thursday to determine output policy. However, prices were set for a monthly drop. Meanwhile, Singapore iron ore futures recorded a 9.6% increase in November at $130.50 a tonne.
