In a turbulent trading session on Tuesday, Asian stock markets saw significant declines, with U.S. futures also pointing toward weakness. Investors are bracing for important employment and inflation reports from the U.S., which are anticipated to influence future interest rate decisions.
Tokyo’s Nikkei 225 index fell 1.6%, closing at 49,383.29. This drop followed preliminary factory data that indicated a slight slowing in manufacturing activity. The S&P Global Flash Purchasing Managers Index, a key measure of economic health, rose marginally to 49.7 from November’s 48.7, just shy of the critical 50 mark that indicates an expansion in the sector. Market watchers are closely monitoring Japanese economic indicators ahead of a Bank of Japan policy meeting scheduled for Friday, with expectations of an interest rate hike that could unsettle global bond and currency markets, as well as the cryptocurrency sector.
Chinese stock markets also faced downward pressure, primarily due to disappointing economic data released on Monday. Retail sales figures for November, which rose by only 1.3% year-on-year, marked the slowest growth rate since the pandemic’s onset in 2022. Weaker lending and investment figures added to the overall pessimistic outlook. Tan Boon Heng from Mizuho Bank noted that the data reflects a loss of momentum as the year comes to a close, consistent with forecasts predicting a slowdown to around 4% growth for the last quarter.
In market performances, Hong Kong’s Hang Seng Index dropped 1.6% to 25,211.24, and the Shanghai Composite index lost 1.1%, settling at 3,825.71. South Korea’s Kospi suffered a more substantial decline of 2.2%, closing at 3,000.13, with technology stocks contributing significantly to the downfall. Notably, shares of computer chip maker SK Hynix fell by 4.3%, while Samsung Electronics declined by 1.9%. Taiwan’s Taiex index also saw a decrease of 1.1%, and Australia’s S&P/ASX 200 slipped 0.4% to 8,598.90.
In the U.S., stock futures mirrored the bearish trend, with shares of iRobot, known for its Roomba robotic vacuums, plummeting by 9.3% after the company announced it had filed for Chapter 11 bankruptcy protection. This development followed a staggering decline of nearly 73% the previous day, as increased competition continued to challenge the company’s market position.
On Monday, the S&P 500 experienced a slight dip of 0.2%, although most stocks within the index recorded gains. The Dow Jones Industrial Average fell by 0.1%, while the Nasdaq composite reduced by 0.6%. Stocks linked to artificial intelligence demonstrated mixed performances, contributing to the overall volatility. Nvidia, a leading chip manufacturer, gained a modest 0.7%, while Oracle experienced a notable drop of 2.7% following an even sharper decline the week prior.
Investor anticipation is mounting ahead of the U.S. economic reports expected this week. Analysts predict that November’s jobs report will indicate the creation of 40,000 new positions, while an inflation update slated for Thursday is expected to show a year-on-year increase of 3.1% in consumer prices. There is hope among investors that while the labor market may show signs of cooling, it does so without pushing the economy toward recession. A balanced approach could prompt the Federal Reserve to consider lowering interest rates, which typically invigorates economic growth and boosts investment values but could also exacerbate inflationary pressures. Unemployment is anticipated to hover around 4.4%, close to its highest levels since 2021.
In the commodities market, U.S. benchmark crude oil prices fell by 37 cents to $56.45 per barrel, while Brent crude, the international standard, dropped 35 cents to $60.21 per barrel.
