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Asia stock markets mixed after Wall Street drops

Wall Street

Tokyo’s Nikkei 225 index dropped by 0.7% to 38,953.49, Hong Kong’s Hang Seng index surged by 0.9% to 16,684.19, the Shanghai Composite index rose by 1.5% to 3,002.59, and the Shenzhen index saw an increase of 2.5%

In Asia on Thursday, shares showed a mixed performance following a lacklustre day on Wall Street, with technology stock sales dragging down benchmarks.

U.S. futures remained steady while oil prices experienced a decline.

Tokyo’s Nikkei 225 index dropped 0.7% to 38,953.49 due to a recent report indicating a notable decrease in factory output in January, the most significant since May 2020. However, retail sales exceeded expectations.

Hong Kong’s Hang Seng index surged 0.9% to 16,684.19, and the Shanghai Composite index rose 1.5% to 3,002.59.

The Shenzhen index saw an increase of 2.5% following the introduction of new regulatory measures to bolster the markets, including enhanced oversight of financial derivatives.

South Korea’s Kospi slipped 0.3% to 2,644.43, while Australia’s S&P/ASX 200 inched up 0.1% to 7,665.50. The previous day, the S&P 500 saw a 0.2% decline to 5,069.76, maintaining a subdued trend since hitting a record high last week. The Dow Jones Industrial Average also dipped 0.1% to 38,949.02. The Nasdaq composite experienced a 0.5% drop to 15,947.74, after nearly reaching its 2021 record by a margin of 0.1%.

In the bond market, Treasury yields eased following a report suggesting that the U.S. economy may have grown slightly slower in late 2023 than previously estimated.

Despite high interest rates aimed at curbing inflation, the economy has continued to outperform expectations, evading a potential recession.

The market witnessed significant declines from Nvidia at 1.3% and Alphabet, Google’s parent company, at 1.8%, both contributing heavily to market downturns.

These tech giants, along with a few others, played a disproportionate role in driving the S&P 500 to new highs.

Such concentration in the market can be a concerning signal, according to Scott Wren, senior global market strategist at Wells Fargo Investment Institute. Broad gains among a wide variety of stocks are typically a more favourable sign that the market’s strength is sustainable.

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