MSCI’s broadest index of Asia-Pacific shares outside Japan declined 1%
Asian shares were down on Thursday as a slump in global tech stocks sent investors fleeing into less risky assets, including short-dated bonds, the yen and Swiss franc.
Chinese stocks, iron ore and oil prices declined further after the country’s central bank sprang a surprise cut in longer-term interest rates, only stoking further concerns about the world’s second-biggest economy.
European markets are set for a lower open, with EUROSTOXX 50 futures 0.6% lower while FTSE futures slid 0.2%. Nasdaq futures, however, rebounded 0.3% and S&P 500 stock futures gained 0.2%.
The sell-off in stocks saw investors raise bets on rate cuts globally, with futures implying a 100% probability of a Fed easing in September. A spike in market volatility fuelled a vicious squeeze on carry trades which saw the U.S. dollar drop 0.7% to 152.78 yen on Thursday.
MSCI’s broadest index of Asia-Pacific shares outside Japan declined 1%, while Japan’s Nikkei dropped 3.3%, exacerbated by 11% slump in Nissan Motor after its quarterly profit plunged 99%.
Taiwan’s markets were shut for a second day due to a typhoon.
Chinese blue-chips slipped 0.9% with the Shanghai Composite index dropping 0.9% to a five-month low. Hong Kong’s Hang Seng slumped 1.7%, finding little support from Beijing’s latest easing step.
On Wall Street, the Nasdaq declined nearly 4% – the worst one-day drop since 2022 – as lacklustre Alphabet and Tesla earnings undermined investor confidence in the already high valuations of the “Magnificent Seven” stocks.
That added to recent market volatility, with Wall Street’s fear gauge jumping to a three-month high. Investors looked for the safety of cash and super-liquid short term debt, with U.S. two-year yields reaching their lowest in nearly six months on Wednesday.
Traders have played outright defence, as the saturated and well-owned tech position continues to be unwound, according to Chris Weston, head of research at Pepperstone.
The other big mover in Asia was the safe-haven yen, up 0.7% to the highest level in 2-1/2 months. It soared 1.1% overnight, with the upward momentum intact ahead of the BoJ’s meeting next week where policymakers will debate whether or not to hike interest rates.
The Swiss franc also gained 0.2% to 0.8826 per dollar, having added 0.7% overnight.