The Nikkei 225 index in Japan dropped 2.5% to 38,704.10, South Korea’s Kospi fell 0.2% to 2,670.75, and Australia’s S&P/ASX 200 dropped 1.5% to 7,727.60
Asian equities experienced a decline on Monday following a strong rally on Wall Street that lost momentum last week.
The Nikkei 225 index in Japan dropped by 2.5% to 38,704.10. The government released updated data indicating that the economy expanded by 0.1% in the final quarter of the year, an improvement from the previously reported minus 0.1% but below expectations.
This suggests that the economy is not in a technical recession, although its growth remains sluggish.
In contrast, Hong Kong’s Hang Seng index increased by 0.9% to 16,498.79, while the Shanghai Composite in China decreased by 0.1% to 3,043.67.
The National People’s Congress in China is set to conclude on Monday with no significant policy changes anticipated.
In other parts of Asia, South Korea’s Kospi fell by 0.2% to 2,670.75, and Australia’s S&P/ASX 200 dropped by 1.5% to 7,727.60.
On Friday, the S&P 500 retreated by 0.7% from its record high, closing at 5,123.69. The Dow declined by 0.2% to 38,722.69, and the Nasdaq fell by 1.2% to 16,085.11.
Initially, shares rose following mixed U.S. job market data, raising hopes for potential interest rate cuts later in the year. However, the market reversed course after Nvidia, a key stock, experienced a rare setback following a significant surge that some critics deemed excessive.
Friday’s decline marked a rare losing week for the S&P 500, only the third in the past 19 weeks.
The jobs report revealed that employers added more workers than anticipated last month, but wage growth was lower than expected. Additionally, job growth in January was not as robust as initially believed.
The overall economy is delicately balanced, requiring just the right amount of growth to avoid a recession without triggering inflationary pressures.
The primary objective is to cool prices sufficiently to prompt the Federal Reserve to lower its key interest rate from its highest level since 2001, alleviating strain on the financial system and the broader economy.
The anticipation on Wall Street is that the remarkably robust economy will spur an increase in corporate profits. Fed Chair Jerome Powell has expressed that the central bank is in close to reducing interest rates and simply requires additional data to validate the decline in inflation towards its 2% objective.
