Stocks in the Asian market are largely seeing a bad day as the shares of tech giants buckled under the realities in the broader global market.
Asian markets recorded a significant plunge as investors buckled on the weight of COVID-19 lockdowns as well as the impacts of monetary policies emanating from the United States. At the close of trading on Friday, the Hong Kong Hang Seng Index (INDEXHANGSENG: HSI) sheds off 791.44, atop a 3.81% slump to 20,001.96.
Besides the Hang Seng, the Shanghai Composite, SSE Composite Index (SHA: 000001) also lost 2.16% to close at 3,001.56 while the Shenzhen Component SZSE Component Index (SHE: 399001) also dropped 2.14% to 10,809.88. The apparent slump in the Chinese stock market maintains a very close correlation with the United States’ top indices.
“In Asia of course we’re very much influenced by what the US Fed does and the US economy but now we face the zero-Covid problem from China,” Richard Martin, a business consultant, and managing director at IMA Asia, told CNBC’s “Street Signs Asia” on Friday.
Richard also noted that the growing coronavirus lockdowns are stirring a new form of lockdown which is largely going to affect the indigenous companies and by extension, the economy.
“A lot of the components and materials come out of China, so in addition to weak demand from China, we’re going to have a shortage of components from China which on the supply side into the markets across Asia will stop factories running,” he said.
The Dow Jones Industrial Average (INDEXDJX: .DJI) plunged down by 3.12% to 32,997.97. The plunge in the 30-stock index was considered the worst daily loss since 2020, a move that has gotten more market stakeholders concerned about what the future holds for the economy amidst growing interest rate hikes.
The tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) dropped 4.99% to 12,317.69 as the S&P 500 Index (INDEXSP: .INX) recorded a 3.56% slump to 4,146.87. The drops are on the back of affirmations that the Federal Reserve will not increase the interest rate by 75 basis points.
“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.
More Market Indices Take the Plunge
Stocks in the Asian market are largely seeing a bad day as the shares of tech giants including Alibaba Group Holding Ltd (HKG: 9988) buckled under the realities in the broader global market. The shares are down by 6.57% to HKD90.35. Tencent Holdings Ltd (HKG: 0700) also plunged by 4.69% to HKD349.20.
Elsewhere in Asia, the Korea Composite Stock Price Index or KOSPI (KRX: KOSPI) also fell by 1.23% to 2,644.51. This is a piece of evidence that the slump is an encompassing one, and a concerted economic effort is billed to be underway to reverse the negative trends.