Asia report: Stocks slide amid fresh geopolitical fears

16th Apr 2024 09:42

(Sharecast News) - Asia-Pacific markets experienced a significant downturn across the board on Tuesday, influenced by global geopolitical concerns and robust economic data from China.

Investors were notably cautious as they awaited Israel's response to Iran's air assault over the weekend.

"Asian stock markets experienced widespread declines, mirroring the sell-off on Wall Street the previous day," said TickMill market analyst Patrick Munnelly.

"This was driven by a surge in bond yields after a report revealed stronger-than-expected US retail sales growth in March.

"The data raised concerns that the US Fed may delay lowering interest rates in June."

Munnelly added that traders remained wary of geopolitical tensions in the Middle East, after most Asian markets ended Monday with lower closing prices.

"In light of the latest data, CME Group's FedWatch Tool currently suggests only a 21.6% likelihood of a quarter point rate cut in June.

"In China, first-quarter GDP growth came in at 5.3% year-on-year, surpassing forecasts, although March retail sales and industrial production fell short of expectations."

Markets join global sell-off to close weaker across the region

In Japan, both the Nikkei 225 and the Topix index recorded significant declines, dropping by 1.94% and 2.04% respectively, closing at 38,471.20 and 2,697.11.

Among the biggest decliners on Tokyo's benchmark were J.Front Retailing, which fell by 9.15%, Fujikura by 8.14%, and Isetan Mitsukoshi by 8.3%.

China's stock markets also faced downward pressure, with the Shanghai Composite and Shenzhen Component indices falling by 1.65% and 2.29% respectively, closing at 3,007.07 and 9,155.07.

Leading Shanghai's declines was Guangzhou Fangbang Electronics, down by 11.98%, and Harbin Xinguang Optic Electronics, down by 11.81%.

In Hong Kong, the Hang Seng Index dropped by 2.12%, closing at 16,248.97.

Major firms such as Sunny Optical Technology Group, Sands China, and Xinyi Solar Holdings witnessed declines ranging from 5.25% to 6.43%.

South Korea's Kospi index mirrored the trend, declining by 2.28%, closing at 2,609.63, with notable losers including Hyundai Electric & Energy Systems, down by 14.49%, and Taihan Electric Wire, down by 10.39%.

Australia's S&P/ASX 200 index also experienced a downturn, dropping by 1.81%, closing at 7,612.50, as Boss Energy and Liontown Resources recorded the biggest declines.

New Zealand's S&P/NZX 50 index saw a more modest decline of 0.94%, closing at 11,804.84.

KMD Brands and Arvida Group were among the companies registering losses of 3.57% and 3.54% respectively.

In currency markets, the dollar was last 0.15% stronger on the yen, trading at JPY 154.51, while the greenback advanced on both the Aussie and the Kiwi, rising 0.35% on the former to AUD 1.5578, and gaining 0.22% on the latter to change hands at NZD 1.6976.

On the oil front, Brent crude futures were last down 0.12% on ICE at $89.99 per barrel, while the NYMEX quote for West Texas Intermediate was off 0.16% at $85.27.

China's economy grows faster than expected in first quarter

In economic news, China's economy showcased resilience in the first quarter of the year, surpassing expectations with a growth rate of 5.3% according to the National Bureau of Statistics.

That exceeded the 4.6% rise forecast by economists surveyed by Reuters, indicating a stronger-than-anticipated economic performance.

The first-quarter GDP figure also outpaced the 5.2% growth recorded in the prior quarter.

On a quarter-on-quarter basis, China's GDP expanded 1.6%; Beijing set a growth target of around 5% for China in 2024.

However, despite the overall positive growth, China's industrial output for March fell short of expectations, growing by 4.5% year-on-year, below the 6% expansion pencilled in by Reuters.

The manufacturing industry showed a growth rate of 5.1%, while the mining sector experienced a more modest growth of 0.2%.

Additionally, the electricity, heat, gas, and water production and supply industry saw an increase of 4.9%.

Similarly, the China's retail sales - a crucial indicator of consumption - grew 3.1% year-on-year, lower than the anticipated 4.6% growth and a slowdown from the prior month's figure of 5.5%.

In a contrasting trend, new home prices in China continued their downward trend for the ninth consecutive month, dropping by 2.2% year-on-year in March.

That was an acceleration from the 1.4% drop recorded in February, and marked the sharpest decrease since August 2015, according to data from LSEG.

On a month-on-month basis, first-tier cities, including Beijing, Shanghai, Guangzhou, and Shenzhen, saw a marginal decrease of 0.1% in new home prices, while second and third-tier cities experienced more pronounced declines of 0.3% and 0.4% respectively.

Reporting by Josh White for Sharecast.com.