Asia report: Tech shares lead region-wide losses

Stocks were almost all weaker across the Asia-Pacific region on Tuesday, with Japan’s markets leading the losses, as investors closed their wallets amid fresh outbreaks of Covid-19 in Greater China.

In Japan, the Nikkei 225 was down 1.77% at 26,336.66, as the yen strengthened 0.37% on the dollar to last trade at JPY 136.93.

Uniqlo owner Fast Retailing slipped 0.71%, while tech shares were weaker still, with robotics specialist Fanuc losing 4.54% and tech investing giant SoftBank Group sliding 4.28%.

Road vehicle behemoth Toyota Motor was 1.65% lower, after it extended the suspension of a production line at its Motomachi manufacturing facility while it probed the cause of a recent recall.

Toyota said that while its global production plans would not change, around 4,000 vehicles would be affected by the suspension.

The broader Topix index lost 1.64% by the end of trading in Tokyo, settling at 1,883.30.

On the mainland, the Shanghai Composite was 0.97% lower at 3,281.47, and the technology-centric Shenzhen Component weakened 1.41% to 12,439.27.

South Korea’s Kospi was 0.96% lower at 2,317.76, while the Hang Seng Index in Hong Kong slid 1.32% to 20,8944.74.

Chinese technology plays were once again on the back foot in the special administrative region, with electric carmaker BYD tumbling 11.93%, while heavyweights Alibaba Group and Tencent Holdings were off 5.44% and 1.34%, respectively.

Sentiment around China took a dive on Monday, after authorities announced the discovery of a new Omicron variant of Covid-19, as well as the shuttering of most commerce and industry in Macau for at least a week amid a fresh outbreak.

The blue-chip technology stocks were on the back foot in Seoul as well, with Samsung Electronics down 1.19% and SK Hynix off 0.43%.

“European stock markets fell on Tuesday with just about every sector in the red - only utilities and telecoms managing to stay green,” said Markets.com chief market analyst Neil Wilson of the global situation on Tuesday morning.

“US stocks broke their five-day win streak, the S&P 500 down over 1% and the Nasdaq sliding by more than 2%.

“After a decent ramp in the last week, we’re just starting to get the kind of earnings jitters we can expect.”

Wilson said he expected that the outlook would not be good.

“Overnight Asian stocks fell to a two-year low.

“Oil also fell amid the risk-off tone - energy crisis in Europe, fresh Covid outbreaks in China and central banks tightening all combining to sour investor mood.

“Treasury yields are lower, with the benchmark 10-year note under 2.94% having traded above 3% yesterday, recession fears driving inflation expectations lower.”

The “push-pull” of inflation versus recession was continuing to move markets, Wilson quipped.

“My bet is that inflation proves stickier than markets think.”

Oil prices were lower as the region went to bed, with Brent crude futures last down 2.25% on ICE at $104.69 per barrel, while West Texas Intermediate was off 2.61% on NYMEX at $101.37.

In Australia, the S&P/ASX 200 managed to go against the regional trend, eking out gains of 0.06% to 6,606.30, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.03% weaker at 11,103.39.

The down under dollars were a mixed picture against the greenback, with the Aussie last 0.03% weaker at AUD 1.4851, while the Kiwi managed to strengthen 0.09% to NZD 1.6344.

Reporting by Josh White at Sharecast.com.