Asia stocks slide as rate cut bets sour, tech tracks Wall St tumble
Investing.com-- Most Asian stocks fell on Friday as markets priced out expectations for a U.S. interest rate cut in December, with technology shares leading losses as they tracked overnight declines on Wall Street.
Middling Chinese economic data added to pressure on Asian markets, as the region’s largest economy struggled to break out a years-long economic downturn.
Regional markets took a weak lead-in from Wall Street, which tumbled overnight as tech shares saw renewed selling on concerns over artificial intelligence-fueled valuations.
Broader sectors also sank as markets rapidly priced out expectations for a December interest rate cut by the Federal Reserve. Investors are pricing in a 45.8% chance for a 25 basis point cut and a 54.2% chance for a hold, CME Fedwatch showed.
S&P 500 Futures rose 0.2% as markets attempted to recoup some recent losses. Reports of more U.S. trade tariff exemptions offered some support.
Tech-heavy bourses led losses in Asia, with South Korea’s KOSPI down 2.5%, while Japan’s Nikkei 225 shed 1.6%.
Japan’s TOPIX, which is relatively less exposed to tech, fell 0.8%.
Hong Kong’s Hang Senglost 0.7%, taking little support from some positive earnings released overnight. Tencent Holdings Ltd (HK:0700) fell 1% even as its September quarter earnings logged strong growth, while Alibaba (HK:9988) rival JD.com (HK:9618) slid 4% despite beating expectations for its quarterly earnings.
Tech was pressured by growing concerns over an artificial intelligence-fueled bubble in market valuations, which sparked steep losses in U.S. tech majors. Market darling NVIDIA Corporation (NASDAQ:NVDA) slid over 3% on Thursday, while TSMC (NYSE:TSM) U.S. shares lost 2.9%.
Losses spilled over into AI-exposed Asian stocks, with Japan’s SoftBank Group Corp. (TYO:9984) down 5.7%. Softbank was set to lose 8% this week after a 19.8% slump last week, given its heavy exposure to AI. This also came to light this week after the company disclosed it was expediting with a $40 billion investment in OpenAI.
South Korea’s SK Hynix Inc (KS:000660) slid 6.2%, while Samsung Electronics Co Ltd (KS:005930) lost nearly 4%.
Losses in mainland Chinese indexes were limited by their relatively lower exposure to tech shares. But the Shanghai Shenzhen CSI 300 still shed 0.4%, while the Shanghai Composite was flat.
Chinese markets were pressured by data showing industrial production grew less than expected in October, amid continued headwinds for local producers from weak demand and U.S. trade tensions.
More concerning was a substantially bigger than expected 1.7% drop in fixed asset investment, which signaled growing reluctance among Chinese businesses to spend.
Retail sales were a minor bright spot, rising slightly more than expected in October on support from the Golden Week holiday.
Broader Asian markets retreated amid waning confidence the Fed will cut interest rates in December. This notion was spurred by several White House officials signaling that the government may not release inflation and employment data for October, leaving the Fed in the blind as it heads into the December meeting.
In Asia, Australia’s ASX 200 slid 1.3%, extending steep losses from yesterday after strong employment numbers further dented expectations for more interest rate cuts by the Reserve Bank.
Singapore’s Straits Times index shed 0.6%, while futures for India’s Nifty 50 index rose 0.2%.
