The Nikkei 225 in Japan extended its losing streak to six straight days, experiencing a significant 3% drop. This decline was part of a widespread sell-off in Asian markets following a sharp decline in Wall Street. The heavyweights of the Nikkei, such as SoftBank Group and Renesas Electronics, experienced substantial losses, with the broader Topix falling by 2.24%. Additionally, the yen strengthened against the U.S. dollar for the fourth consecutive day, reaching an 11-week low of 152.28. The Bank of Japan is expected to discuss a rate hike at its upcoming monetary policy meeting and may outline a plan to halve its bond buying. The Japanese government has also agreed to increase the minimum hourly wage, providing the Bank of Japan with more flexibility to consider a rate increase as it aims for a “virtuous cycle” of rising prices and wages.
Investors also analyzed South Korea’s advance second-quarter GDP numbers, which slightly missed economists’ expectations. The country’s GDP grew by 2.3% year on year, lower than the anticipated 2.5%. On a quarter-on-quarter basis, South Korea’s economy contracted by 0.2%, contrasting with the predicted 0.1% growth. This decline was a reversal from the 1.3% growth recorded in the first quarter. As a result, South Korea’s stock market experienced losses, with the Kospi dropping by 1.8% and the Kosdaq falling by 2.32%. SK Hynix, a major player in the market, contributed to the index’s decline despite reporting record-breaking quarterly revenue and profits.
The Hang Seng index in Hong Kong slipped by 1.65%, while the mainland Chinese CSI 300 was down by 0.98%. China’s central bank recently reduced the medium-term facility lending rate in a bid to stimulate the economy, following earlier cuts to its loan prime rates. These measures were taken to address economic challenges and provide support to businesses facing financial difficulties. In Australia, the S&P/ASX 200 also experienced a decline of 0.94%, reflecting the broader negative sentiment in the region.
Global Market Impact
The turbulence in Asian markets was echoed in the U.S., where the S&P 500 and Nasdaq Composite had their worst performing days since 2022. The S&P 500 fell by 2.31% to close at 5,427.13, while the Nasdaq dropped by 3.64% to end at 17,342.41. The Dow Jones Industrial Average lost 504.22 points, or 1.25%, closing at 39,853.87. Tech giants like Nvidia, Meta Platforms, Alphabet, and Tesla all witnessed significant declines in their stock prices. Tesla, in particular, experienced its worst day since 2020, with a 12.3% decline attributed to weaker-than-expected results and a year-over-year drop in auto revenue.
The Asian markets are currently facing significant challenges, with various factors contributing to the recent downturn. It is essential for investors to closely monitor market developments and adapt their strategies to navigate through these turbulent times.
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