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Asian stocks plunge again after latest U.S. sell-off

WT24 Desk

Wall Street’s woes have spread to Asia again, CNN reports. Stocks in the region plunged Friday, racking up more losses in a brutal week for global markets.

 The Nikkei in Tokyo dropped more than 3%, while Hong Kong’s Hang Seng fell more than 4%. Shanghai stocks fared even worse, plummeting nearly 6% at one point.

The latest trouble for Asian markets followed more grim news from Wall Street. The Dow closed down 4.1% Thursday after another volatile trading session

It was the second time in history that the Dow has lost more than 1,000 points in a single day. The other time was Monday.

The Nikkei is now down 12% from its peak in late January. That means that like the Dow and some European markets, it’s in correction territory — a decline of 10% or more from a recent high.

Experts generally agree that the U.S. and other major economies are in good shape. But investors are worried about inflation and the possibility that the Federal Reserve will hike interest rates faster than previously anticipated in order to rein it in.

The yield on 10-year U.S. Treasury bonds hit a four-year high on Thursday. Rising yields in the U.S. government bond market are a decent indicator of fears about inflation.

And if they stay high, they will continue to set a “pessimistic tone” for Asian markets, said Jingyi Pan, a market strategist at stock broker IG Group.

The gloom was particularly heavy in Shanghai on Friday.

JPMorgan Asset Management’s chief market strategist Tai Hui attributed the selling to “Chinese investors wanting to cash out” before next week’s Lunar New Year holiday.

China’s currency was also sliding. The yuan has shed about 1.6% of its value versus the U.S. dollar over the past couple of days.

Tommy Xie, an economist at OCBC Bank, said the yuan’s decline was mainly triggered by a surprise narrowing in China’s trade surplus in January.

Government data published Thursday showed imports surged 37% from a year earlier. A shrinking trade surplus suggests less demand for a country’s currency, which can cause it to weaken.

The drop has ended a broad rally for the Chinese currency against the dollar in recent months.

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