Asian Stocks Fall After Wall Street Decline Amid Economic Concerns

HONG KONG — Asian markets plummeted on Wednesday, following a significant downturn on Wall Street, where Nvidia’s stock dropped 9.5%, leading to a ripple effect across global chip-related markets.

Japan’s Nikkei 225 index experienced the most profound loss in the region, plunging 3.8% to 37,211.09. This decline marked a notable setback for investors, particularly impacting major players in the electronics sector. Tokyo Electron, a leading semiconductor manufacturer in Japan, saw its shares fall by 7% during morning trading.

In South Korea, the Kospi index dipped 3.0% to 2,584.81, largely due to a 3.1% fall in shares of tech giant Samsung Electronics. Taiwan was not spared either, with the Taiex index declining 4.0%, significantly affected by a 4.7% drop in Taiwan Semiconductor Manufacturing Company’s stock price.

Australia’s S&P/ASX 200 also faced a downturn, falling 2.1% to 7,933.40 after the latest economic data revealed a 1% GDP growth in the second quarter of 2023, slightly surpassing analysts’ expectations. Meanwhile, Hong Kong’s Hang Seng index decreased by 1.1% to 17,462.25, while the Shanghai Composite index lost 0.5% to settle at 2,789.39.

As a result of this turmoil, U.S. futures pointed lower. The decline in oil prices was driven by increased oil supply following reports that Libya was nearing a resolution of its internal conflict over oil revenue control, which could lead to higher oil production.

Benchmark U.S. crude prices fell by 45 cents to $69.89 per barrel, while Brent crude, the international standard, decreased by 42 cents to $73.33 per barrel.

Concerns over the health of China’s economy, the world’s largest crude oil importer, further exacerbated fears regarding future oil demand. Recent data indicating a slump in real estate and weak consumption fed into these worries.

Nvidia’s significant loss on Tuesday, which saw it drop 9.5%, reflected broader market concerns. Although the company exceeded earnings expectations, its stock continued to face challenges. Analysts are questioning whether Nvidia and other major tech firms have become overvalued in light of the AI buzz that recently drove stock prices to record highs.

The S&P 500 index had a difficult session on Tuesday, falling 2.1% and erasing a portion of the gains accumulated during a three-week winning streak that had brought it near its all-time high. The Dow Jones Industrial Average saw a decline of 626 points, or 1.5%, marking a retreat from its previous record high. The Nasdaq composite index fell 3.3%, with Nvidia and other tech stocks leading the downturn.

Adding to the market’s woes, Treasury yields declined after an August manufacturing report indicated contraction, continuing a trend that has persisted for almost two years due to elevated interest rates. The August figures fell short of economists’ expectations, reflecting a subdued economic demand.

According to Timothy Fiore, chair of the Institute for Supply Management’s manufacturing survey committee, “Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and election uncertainty.”

Additional reports scheduled for later in the week are expected to shed more light on the economy’s status, including data on job openings and the performance of U.S. services businesses in August. The most anticipated report will be released on Friday, detailing job creation figures for the same month.

In total, the S&P 500 decreased by 119.47 points, ending at 5,528.93. The Dow dropped 626.15 points to 40,936.93, while the Nasdaq composite fell by 577.33 points, closing at 17,136.30.

The bond market also saw changes, with the yield on the 10-year Treasury falling to 3.84%, down from 3.91% at the close of the previous week. This decline marks a notable shift from the highs seen back in late April, when yields reached 4.70%.

Currency trading showed the U.S. dollar almost unchanged against the Japanese yen at 145.48. The euro traded at $1.1054, an increase from $1.1043.