Asian Stocks Extend Losses Amid Bond Market Rout and Israel-Hamas Tensions
Asian Stocks Hit by Global Bond Market Sell-Off and Geopolitical Concerns
Asian stocks continued to suffer significant losses on Friday as global bond markets experienced a steep sell-off, eroding risk appetite. In addition, traders remained on edge due to escalating tensions in the Israel-Hamas war.
Regional Markets Spooked by Sharp Sell-Off in Global Bonds
Sharp sell-offs in global bonds this week have rattled regional markets, reaching a climax on Thursday following comments from Federal Reserve Chair Jerome Powell. Powell’s remarks indicated that an interest rate hike is still being considered this year. Other Federal Reserve officials echoed Powell’s stance, especially as recent data highlighted persistent U.S. inflation. Consequently, Asian markets face challenges as higher interest rates diminish their appeal and limit foreign capital inflows.
Sticky Inflation Dents Japan’s Nikkei with Weekly Losses Expected
The Nikkei 225 index fell by 0.6% and is on track for a weekly loss of 3.2% after data released on Friday revealed that Japanese core inflation grew more than expected in September. The Bank of Japan closely monitors core inflation, which has remained close to 40-year highs, indicating persistent inflation. Former BOJ officials hinted that the bank may end its negative rate regime as early as December, putting an end to nearly a decade of easy monetary policy that has supported Japanese stocks. Loose monetary conditions have been a major driver of this year’s Japanese stock rally, which saw the Nikkei reach 30-year highs.
Asian Tech Stocks Under Pressure from Spike in Bond Yields and Chipmaking Losses
Asian technology stocks faced significant pressure this week due to a spike in global bond yields, which reduced the appeal of growth stocks amid prospects of higher interest rates. Furthermore, weak third-quarter profit figures from major chipmaker TSMC and losses in chipmakers further weighed down tech stocks. South Korea’s KOSPI index was among the hardest hit, dropping nearly 2% as heavyweight chip stocks SK Hynix Inc and Samsung Electronics fell over 1% each. The tech-heavy Hang Seng Index in Hong Kong also suffered, declining by 0.7% and heading for a 3.9% drop for the week. Australia’s ASX 200 index fell by 1.3%, with losses in technology and mining stocks, driven by weaker metal prices and middling production reports. India’s Nifty 50 index futures signaled a weak opening due to the drag on tech stocks this week.
Chinese Stocks Decline as Property Sector Concerns Persist
Chinese stocks experienced minor losses on Friday but are set for significant weekly declines due to ongoing concerns about the country’s property sector, which largely offset data indicating stronger economic growth. The Shanghai Composite Index fell by 0.1% and traded close to a one-year low, while the Shenzhen Component Index dropped by 0.2% and also reached a near one-year low. Both indexes are expected to lose between 1.7% and 2.2% for the week. Traders remain cautious about Chinese assets due to uncertainties surrounding a potential default by Country Garden Holdings. The troubled property developer reportedly missed a key payment on its international bonds this week and is now seeking more talks with bondholders. China’s central bank kept its benchmark interest rate unchanged at record lows on Friday, in line with expectations.
It’s crucial for investors to closely monitor the performance of Asian stocks amid the ongoing bond market sell-off and geopolitical tensions. The impact of global events on regional markets underscores the need for a diversified investment strategy.
