Asian Tech Indexes Hit by Wall Street Downturn and Bond Yield Surge
Investing.com
Published Oct 19, 2023 03:53AM ET
Asian technology indexes experienced significant losses on Thursday, influenced by increasing bond yields, a downturn on Wall Street, and anticipation of a high-interest rate plan outline from Federal Reserve Chair Jerome Powell. The Hang Seng index in Hong Kong fell 2.1%, driven by a sharp decline in major Hong Kong-listed electric vehicle manufacturers following Tesla (NASDAQ:TSLA)'s disappointing Q3 results. South Korea's KOSPI dropped 1.5% due to a slump in chipmaking stocks, even though the Bank of Korea kept interest rates steady. Japan's Nikkei 225 decreased by 1.6% amid weak tech stocks and speculation about the Bank of Japan ending its negative interest rates this year.
The ongoing Israel-Hamas conflict, highlighted by a Gaza hospital strike, escalated market tension. Additional fears arose from a potential significant default in China’s property sector after Country Garden seemingly missed an offshore bond payment.
On Wednesday, rising Middle East tensions, disappointing Morgan Stanley earnings, and tech sector news triggered a stock market downturn impacting major indexes like Dow Jones, S&P 500, and Nasdaq Composite. The escalation was fueled by rising oil prices due to Middle East conflicts and Iran's Foreign Minister proposing an Israel embargo.
Investors speculated on the Federal Reserve's interest rate decisions considering rising fuel prices, robust retail sales data, and growing expectations of a Fed rate hike this year. ASML, a Dutch chip equipment maker, saw its shares drop after warning about flat sales amidst economic uncertainty. Nvidia (NASDAQ:NVDA) and other semiconductor manufacturers faced stock declines due to the US's tightened AI chip technology export restrictions to China, leading to a Citi analysts' downgrade of Nvidia's sales forecasts.
Morgan Stanley’s shares tumbled over 6% following reports of shrinking quarterly profits, underscored by a 27% decrease in investment banking revenues and a 4% drop in trading stocks and bonds revenue.
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