Asian Stocks Slide as Rising Yields Hit Tech, Investors Await Fed Chair’s Speech
Asian stocks faced a significant decline on Thursday, with technology-heavy indexes experiencing heavy losses due to a surge in bond yields. Additionally, investors were on edge as they awaited a speech from Federal Reserve Chair Jerome Powell.
Technology Stocks and Bond Yields
Most Asian stocks saw a tumble, primarily driven by a rise in bond yields. Technology stocks, in particular, faced immense pressure as global bonds experienced a rout, leading to increased yields. This situation was further exacerbated by Federal Reserve officials reiterating their plans to keep interest rates higher for an extended period.
Israel-Hamas Conflict and Middle East Tensions
Concerns over the escalation of the Israel-Hamas war had a significant impact on market sentiment. The recent strike on a Gaza hospital intensified fears that the conflict could spread to other Middle Eastern countries. These concerns have weighed heavily on investor sentiment over the past week.
China’s Property Sector and Default Concerns
Market tension also arose due to a major default in China’s property sector. Country Garden, a beleaguered developer, seemed to have missed a payment on its offshore bonds, raising concerns about a potential domino effect on the market.
Asian Tech Stocks and Market Performance
Hong Kong’s market severely lagged behind its peers, sinking by 2.1%. This decline was driven by a drop in major Hong Kong-listed electric vehicle makers following Tesla’s weaker-than-expected third quarter performance. South Korea’s market also lost 1.5% due to weakness in major chipmaking stocks. Japanese stocks faced a decline of 1.6%, attributed to weakness in the tech sector and concerns over the Bank of Japan’s negative interest rates potentially ending this year. Futures for India’s index pointed to a weak open, indicating potential weakness in heavyweight tech stocks.
Impact of Rising Bond Yields and Fed Chair’s Speech
Asian tech stocks suffered a significant blow due to the spike in bond yields, especially in Treasuries. This surge in yields led to expectations of higher U.S. interest rates, adversely affecting the stock market. Investors eagerly awaited Federal Reserve Chair Jerome Powell’s speech at the Economic Club of New York for further insights into the future path of interest rates. However, given the recent data indicating persistent U.S. inflation, it is widely anticipated that Powell will reiterate his stance of maintaining higher rates for a longer duration.
China’s Property Concerns and Broader Market Impact
China’s and indexes fell by approximately 1.1% and 0.9% respectively, amidst growing concerns about the potential default by Country Garden. The passing of the deadline for a crucial offshore coupon payment without any signs of payment further added to the worries. These concerns spilled over into Australia’s market, with the losing 1.3% due to losses in commodity prices that heavily impacted local mining heavyweights. Additionally, middling quarterly earnings from U.S. banks added to the pressure on Asian bank stocks, given signs of credit growth slowing amid high interest rates.
Overall, Asian markets faced significant challenges from rising bond yields, geopolitical tensions, and concerns surrounding China’s property sector. Investors closely monitored the impact of these factors on the stock market while keeping a watchful eye on the Federal Reserve Chair’s speech for guidance on future interest rate movements.
