Asian stock markets experienced declines on Thursday, following a third straight day of losses on Wall Street. Japan's Nikkei and China's major indices were particularly affected by worsening economic indicators and rising Treasury yields, while oil prices saw a slight increase.
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- Asian stock markets declined after Wall Street`s third straight loss.
- Economic indicators show deteriorating conditions in Japan.
- McDonald`s shares fell amid an E. coli outbreak linked to its Quarter Pounder burgers.
Asian stock markets took a hit on Thursday, following a third consecutive day of losses on Wall Street. The prolonged rally that had been setting records is showing signs of fatigue. Oil prices, however, gained nearly USD 1, and US futures were mixed.
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In Japan, the benchmark Nikkei 225 index lost its earlier gains and was trading flat at 38,104.86. This downturn was partly due to purchasing manager indexes (PMIs) indicating deteriorating conditions for both manufacturing and services in Japan. According to a commentary by Usamah Bhatti, an economist at S&P Global Market Intelligence, the overall composite PMI compiled by au Jibun Bank fell to a two-year low. He noted, "Japan's private sector fell into contraction territory at the start of the fourth quarter of the year," adding that confidence in business activity growth for the next year softened, reaching its lowest level since August 2020.
Chinese markets also felt the strain, with Hong Kong's Hang Seng index declining by 1% to 20,555.04, while the Shanghai Composite index fell 0.5% to 3,286.17. South Korea's Kospi dipped 0.2% to 2,593.57, and Australia's S&P/ASX 200 edged up by a mere 0.1% to 8,225.90. Taiwan's Taiex experienced a 0.5% loss, and India's Sensex fell 0.2%.
Market sentiment was weighed down by concerns over China’s economic outlook and the contentious US presidential election, as highlighted by Stephen Innes of SPI Asset Management.
On Wall Street, the S&P 500 index declined by 0.9% to 5,797.42, marking a pullback following a remarkable six-week winning streak, the longest of the year. This downturn can be attributed to rising Treasury yields, which create reluctance among investors to pay high prices for stocks perceived as expensive. The Dow Jones Industrial Average fell by 1% to 42,514.95, while the Nasdaq composite tumbled 1.6% to 18,276.65, with Nvidia and other major technology stocks significantly impacting the market.
The yield on the 10-year Treasury rose to 4.23% from 4.21% late Tuesday and 4.08% just last Friday. This increase follows several reports indicating that the US economy is performing better than anticipated, fuelling optimism that it could avoid a severe recession despite ongoing inflation concerns.
In corporate news, McDonald's shares dropped by 5.1% after federal health officials linked its Quarter Pounder burgers to an E. coli outbreak affecting at least 49 people across ten states. The investigation is ongoing, and the Centers for Disease Control and Prevention has reported that McDonald's has stopped using certain ingredients amid the inquiry. Coca-Cola saw a decline of 2.1%, despite surpassing analysts' expectations for profit and revenue. Meanwhile, Boeing's stock fell 1.8% following a quarterly loss exceeding USD 6 billion and a vote by factory workers to continue a six-week strike.
Conversely, AT&T shares rose by 4.6% after reporting stronger-than-expected profits, while Texas Instruments climbed 4% due to better-than-anticipated results in the semiconductor sector.
In early trading on Thursday, US benchmark crude oil rose by 91 cents to USD 71.68 per barrel, while Brent crude, the international standard, increased by 86 cents to USD 75.82 per barrel. The dollar dipped to 152.22 Japanese yen after briefly exceeding 153 yen on Wednesday, while the euro rose to USD 1.0790 from USD 1.0783, according to AP reports.
(With inputs from Agencies)
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