Asia’s major stock indexes slipped back into the red on Thursday with investors increasingly anxious over the the threat of persistently high interest rates.
Regional stocks eyed their longest losing streak in two years, while oil prices scaled one-year highs, as hopes of a drop in rates any time soon fade, sending investors to shelter in the safety of a surging US dollar.
Japan’s Nikkei share average suffered its biggest one-day percentage drop in a month with traders rattled by the prospect of high-cost borrowing for the foreseeable future.
The Nikkei closed down 1.54% at 31,872.52, having dropped to a one-month low of 31,674.42 during the session. The broader Topix shed 1.43% to 2,345.51, a near four-week trough.
The Nikkei has slipped about 5% since scaling a 33-year peak in June but is still up roughly 23% this year and remains Asia’s best-performing stock exchange in 2023 helped by strong foreign inflows.
Meanwhile, Japan’s Finance Minister Shunichi Suzuki said the country won’t rule out any options to deal with excessive currency volatility, reiterating a warning against speculative moves on the yen which is struggling near 11-month lows against the dollar.
The dollar/yen hit 149.71 on Wednesday and traded at 149.40 on Thursday in Asia.
Chinese blue-chip stocks slipped as investors were cautious ahead of a week-long holiday, while Hong Kong shares tracked global peers on high interest rates.
The blue-chip CSI 300 Index was 0.30% lower, while the Shanghai Composite Index edged up 0.10%, or 3.16 points, to 3,110.48. The Shenzhen Composite Index on China’s second exchange gained 0.44%, or 8.31 points, to 1,910.28.
Traders will be watching out for consumption data due out during China’s week-long National Day holiday that begins on Friday. Mainland markets will reopen on October 9.
In Hong Kong markets, tech giants slumped 1.6% and mainland property developers lost 1.1%.
Trading in shares of China Evergrande were suspended after a report said its chairman had been placed under police surveillance, intensifying concerns over the developer’s future as it struggles with a growing threat of liquidation.
Hong Kong’s benchmark Hang Seng Index dropped 1.36%, or 238.84 points, to 17,373.03, while the Hang Seng China Enterprises Index slipped 1.31%.
Elsewhere across the region, Indian stocks retreated with Mumbai’s signature Nifty 50 index down 0.83%, or 163.65 points, at 19,552.80. Seoul’s Kospi was shut for a holiday. MSCI’s index of Asia-Pacific shares outside Japan was pinned near a 10-month trough.
Oil Prices Surge
The global picture was just as downbeat as oil prices scaled one-year highs.
A surprisingly big drop in US crude stocks has stoked concern that fuel demand is outstripping production right when markets least needed another supply-side shock.
US crude rose 3.6% on Wednesday and another 1% on Thursday to hit $95 a barrel for the first time since August 2022. Brent futures hit a one-year high at $97.69.
Overnight, the S&P 500 eked out a slim gain after a see-saw session as investors weighed whether to start bargain-hunting following a sell-off fuelled by elevated Treasury yields and uncertainty about the path ahead for interest rates.
The prospect of higher energy costs and the spectre of sticky inflation put more pressure on longer-dated bonds. Benchmark 10-year Treasury yields were steady in Asia, but at 4.599% are up more than 50 basis points this month.
Traders are also watching lawmakers’ efforts to avoid a US government shutdown.
Gold was heading for its worst week since February as the rise in Treasury yields drives investors out of the precious metal, which pays no yield, and it nursed losses at $1,875 an ounce.
Tokyo – Nikkei 225 < DOWN 1.54% at 31,872.52 (close)
Hong Kong – Hang Seng Index < DOWN 1.36% at 17,373.03 (close)
Shanghai – Composite > UP 0.10% at 3,110.48 (close)
London – FTSE 100 < DOWN 0.82% at 7,530.83 (0934 BST)
New York – Dow < DOWN 0.20% at 33,550.27 (Wednesday close)
- Reuters with additional editing by Sean O’Meara