Asian markets faced a significant downturn on Friday, mirroring the losses seen on Wall Street as concerns over technology sector valuations and uncertainties surrounding the Federal Reserve’s monetary policy continued to weigh heavily on investor sentiment.
In Japan, the Nikkei 225 index experienced a sharp decline of 1.85%, with the broader Topix index falling 1.03%. The technology sector was at the forefront of this downturn, with notable declines from key players. Rakuten Group saw a substantial drop of 6.57%, semiconductor testing equipment manufacturer Advantest fell 5.27%, and Lasertec experienced a 3.97% retreat. SoftBank, a major technology conglomerate, fell as much as 8% in early trading, marking its third consecutive day of losses following its announcement of selling its entire stake in Nvidia.
South Korea was not spared either, with the Kospi index dropping 2.29% and the small-cap Kosdaq declining by 1.42%. The slide was exacerbated by a more than 3% fall in Samsung Electronics, while SK Hynix, a supplier of memory chips to Nvidia, experienced a significant decline of 5%. However, the South Korean won showed some resilience, strengthening 0.72% to 1,460.0 against the dollar after Finance Minister Koo Yun-cheol noted that authorities would consult with major market players to stabilize the won in light of growing currency market volatility. Koo highlighted a structural mismatch in the supply and demand for U.S. dollars that required attention.
In Australia, the S&P/ASX 200 dropped 1.58%. Meanwhile, the Hang Seng Index in Hong Kong decreased by 0.88%, and mainland China’s CSI 300 dipped 0.64%. Economic data from China painted a concerning picture, with fixed-asset investment contracting by 1.7% for the first ten months of the year, a notable decline from a 0.5% decrease previously reported. Industrial output growth for October underperformed expectations, registering a 4.9% year-on-year increase against anticipations of 5.5%, while retail sales saw a year-on-year increase of 2.9%, slightly exceeding forecasts but showing a deceleration from September’s growth.
On the other side of the Pacific, the U.S. markets also suffered significant losses. The Dow Jones Industrial Average fell by 797.60 points, or 1.65%, closing at 47,457.22 and distancing itself from recent record highs. The S&P 500 slid 1.66% to finish at 6,737.49, with substantial losses in the information technology and communication services sectors, particularly after Disney reported mixed fiscal fourth-quarter results, causing its stock to plummet nearly 8%. The Nasdaq Composite fell 2.29%, closing at 22,870.36, marking one of the worst trading days since early October.
Concerns over future Federal Reserve decisions have also contributed to the uncertainty in markets. Recent comments from officials, including Boston Fed President Susan Collins, suggest a cautious approach to further interest rate cuts, prompting a shift in market expectations. Traders, who earlier anticipated a strong probability for a quarter-point rate cut, are now facing a more uncertain landscape, with futures indicating a close probability of such an action.
As global markets navigate through these turbulent waters, investors remain vigilant about upcoming economic data and central bank policies that could influence market direction in the months ahead.
