Sunday, September 25, 2022

Hong Kong’s Hang Seng index drops more than 3% following Wall Street tumble

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SINGAPORE — Shares in Asia-Pacific largely declined in Friday morning trade after an overnight drop on Wall Street sent the Dow Jones Industrial Average to its worst day since 2020.

Hong Kong’s Hang Seng index led losses regionally as it fell 3.27%. In mainland China, the Shanghai Composite slipped 1.56% while the Shenzhen Component shed 1.465%.

Technology stocks in the region sold off, following the tech-heavy Nasdaq Composite’s nearly 5% drop overnight stateside.

Shares of Tencent declined 4.04% while Alibaba fell 6% and Meituan slipped 4.25%. Hong Kong’s Hang Seng Tech index traded 4.41% lower. The broader risk-off sentiment also extended to electric vehicle stocks, with Xpeng plunging 9.99% while Nio shed 12.19%.

With no obvious news flow to explain the sharp reversal, it seems instead that the relief of Powell indicating 75bp moves were likely a step too far gave way to a renewed focus on high inflation and a challenging growth outlook.

Taylor Nugent

economist, National Australia Bank

In Japan, shares of conglomerate SoftBank Group dropped 2.48%. South Korea’s Kakao slipped 4.38% while industry heavyweight Samsung Electronics declined nearly 2%.

Other Asia-Pacific markets mostly dip

South Korea’s Kospi dropped 1.36%. The S&P/ASX 200 in Australia shed 2.27% while Singapore’s Straits Times index traded 1.38% lower.

Japanese stocks bucked the overall trend regionally as they returned to trade on Friday after being closed for holidays much of this week. The Nikkei 225 gained 0.12% while the Topix index traded 0.55% higher.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded 2.3% lower.

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Overnight on Wall Street, the Dow Jones Industrial Average plunged 1,063.09 points — or 3.12% — to 32,997.97. The S&P 500 fell 3.56% to 4,146.87.

Thursday’s moves on Wall Street were a sharp reversal from a Wednesday rally after the U.S. Federal Reserve increased its benchmark interest rate by half a percentage point, in line with market expectations and also the biggest hike in two decades.

Fed Chairman Powell also indicated raising rates by 75 basis points at a time is “not something the committee is actively considering.”

“With no obvious news flow to explain the sharp reversal, it seems instead that the relief of Powell indicating 75bp moves were likely a step too far gave way to a renewed focus on high inflation and a challenging growth outlook,” Taylor Nugent, an economist at National Australia Bank, wrote in a Friday note.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 103.75 after a recent jump from below 103.

The Japanese yen traded at 130.73 per dollar, weaker as compared to levels below 130 seen against the greenback earlier in the week. The Australian dollar was at $0.7097 after yesterday’s decline from levels above $0.721.

Oil prices were higher in the morning of Asia trading hours, with international benchmark Brent crude futures up 0.13% to $111.04 per barrel. U.S. crude futures also gained 0.14% to $108.41 per barrel.

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