The Asian stock market experienced a downturn due to the anticipation of more cues on inflation and the Federal Reserve’s decisions. The news of increased U.S. trade scrutiny against China added to the negative sentiment among investors. This led to most Asian stocks falling, with only a few positive cues from the record-high closes on the S&P 500 and the NASDAQ Composite.
Reports of the U.S. considering wider trade sanctions on semiconductor exports to Russia and potentially targeting Chinese and Hong Kong chip resellers raised concerns over worsening trade ties between these major economies. The escalation of U.S. scrutiny towards Chinese companies further fueled apprehensions among investors.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell by about 0.2% each, while Hong Kong’s Hang Seng slid by 1.6%, emerging as the worst performer among Asian indexes. Japan’s Nikkei 225 and TOPIX indexes also experienced a decline of about 0.8% each. Australia’s ASX 200 fell by 0.5%, reflecting the overall negative sentiment across the Asian markets.
South Korea’s KOSPI was the outlier among its peers, rising by 0.3% on the strength of chipmaking stocks. This positive movement showcased resilience amid the broader market downturn in the region.
Futures for India’s Nifty 50 index pointed to a flat open after reaching new record highs. The impact of the 2024 general election results, which saw a BJP-led alliance with a smaller majority, was largely shrugged off. However, Prime Minister Narendra Modi’s commitment to economic reforms, as indicated by his recent cabinet appointments, provided some stability in the Indian market.
The conclusion of a two-day Fed meeting, where the central bank is expected to maintain unchanged rates, added to the fragile sentiment among investors. The outlook on inflation and potential rate cuts will be closely monitored by market participants for further insights into the future direction of the market.