Asia report: Markets tumble on fresh global economic fears

Markets across the Asia-Pacific region experienced significant declines on Friday, driven by heightened recession concerns following a major sell-off on Wall Street.

Stocks in Japan led the losses, with the benchmark index dropping almost 6% by the close and the Topix finishing even weaker than that.

“Amid worries about the outlook for global economic growth following some disappointing economic data from the US, Europe, and China that offset optimism about a near-term interest rate cut by the US Fed, Asian stock markets are a sea of red on Friday,” said TickMill market analyst Patrick Munnelly.

“This is in response to the overnight negative cues from global markets.

“Data revealed that first-time claims for unemployment benefits in the United States reached their highest point in over a year last week and that manufacturing production in the country unexpectedly shrank at an accelerated rate in July.”

Munnelly said traders were currently awaiting the highly anticipated report on employment for July from the US Labor Department.

“The Japanese stock market is currently trading considerably lower on Friday, compounding the strong losses from the previous session.

“This is due to the general bearish indications from global markets overnight.

“The largest sectors experiencing difficulties are technology and financial companies, as well as index heavyweights.”

Markets tumble across the Asia-Pacific region

Japan's stock market led the region’s losses, with the Nikkei 225 dropping 5.81% to 35,909.70, its lowest level in eight months.

The broader Topix index suffered its worst single-day loss in eight years, plunging 6.14% to 2,537.60.

Japan's financial and technology sectors were hit hard, with Daiwa Securities Group seeing an 18.85% loss, the steepest among Nikkei-listed companies.

Dainippon Screen Manufacturing and Sumco also faced severe declines, falling 13.48% and 12.34%, respectively.

Major companies like SoftBank Group, Mitsui, and Marubeni saw significant drops as well, exacerbating the market's overall downturn.

China’s markets were not spared, with the Shanghai Composite falling 0.92% to 2,905.34 and the Shenzhen Component dropping 1.38% to 8,553.55.

Notable losers included Shang Hai Ya Tong and SEC Electric Machinery, both of which saw their share prices plummet by over 10%.

In Hong Kong, the Hang Seng Index declined by 2.08% to 16,945.51.

Real estate and tech stocks were among the worst performers, with Wharf Real Estate Investment, Meituan, and Galaxy Entertainment Group each losing more than 4%.

South Korea’s Kospi index fell sharply by 3.65% to 2,676.19, weighed down by substantial losses in tech stocks.

SK Hynix dropped 10.4%, while Hanmi Semiconductor and SK Square fell 9.35% and 8.88%, respectively.

Australia’s S&P/ASX 200 decreased by 2.11% to 7,943.20, driven by a steep sell-off in energy and consumer stocks.

Paladin Energy and Domino's Pizza Enterprises saw significant losses, falling 10.81% and 9.24%, respectively.

New Zealand's market showed relative resilience, with the S&P/NZX 50 edging down only 0.28% to 12,453.04.

However, financial stocks like Westpac Banking Corporation dropped 5.69%, contributing to the market's slight decline.

In currency markets, the dollar was last down 0.25% on the yen to trade at JPY 148.98, and weakened 0.14% against the Aussie to AUD 1.5359.

The greenback was stronger on the Kiwi, however, advancing 0.06% to change hands at NZD 1.6819.

Oil prices saw modest gains, with Brent crude futures last up 0.57% on ICE to $79.97 per barrel, and the NYMEX quote from West Texas Intermediate increasing 0.58% to $76.75.

South Korean inflation slightly above forecasts

In economic news, South Korea's inflation rate for July slightly exceeded expectations, with the consumer price index (CPI) rising 2.6% compared to the 2.5% anticipated by economists surveyed by Reuters.

In the United States, new economic overnight heightened fears of a potential recession.

Initial jobless claims saw their largest increase since August 2023, raising concerns about the health of the labour market.

Additionally, the ISM manufacturing index, a key indicator of factory activity, fell to 46.8%, below expectations and firmly in contraction territory.

The developments sparked worries that the Federal Reserve might be slow to respond with interest rate cuts, potentially exacerbating economic challenges.

Reporting by Josh White for Sharecast.com.