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Wall Street indexes closed lower on Wednesday as a spike in Treasury yields saw investors largely look past strong earnings from Meta Platforms Inc (NASDAQ:META) and IBM (NYSE:IBM). Google parent Alphabet Inc (NASDAQ:GOOGL) also logged steep losses, falling nearly 10% after its third quarter earnings disappointed.
This gave Asian markets a weak lead-in, with Japan’s Nikkei 225 leading losses as local technology stocks reversed recent gains. Other tech-heavy indexes, such as South Korea’s KOSPI and Hong Kong’s Hang Seng, also logged steep declines, losing between 0.7% and 2.2%. The KOSPI fell even as data showed third-quarter economic growth was more than expected.
The Nikkei lost 2.1% in morning trade, and was among the worst performers in Asia for the day. Tech heavyweights Advantest Corp. (TYO:6857), Tokyo Electron Ltd. (TYO:8035) and SoftBank Group Corp. (TYO:9984)- which had seen a strong run-up earlier this week, were the biggest decliners on the index.
A 2% jump in Japanese 10-year yields rattled local stocks, as did the yen weakening past the 150 level, which put the Japanese currency close to a 33-year low.
The spike in yields and the weakening yen ramped up fears that the Bank of Japan will consider tightening its ultra-loose policy when it meets next Tuesday. Media reports earlier this week suggested that the bank was considering widening its yield curve control policy, amid growing pressure from debt and currency markets.
A rise in U.S. Treasury yields, which resumed their climb back to multi-year peaks, rattled broader Asian markets as investors hunkered down before a Federal Reserve meeting next week. Focus is also on key U.S. third-quarter gross domestic product data due later in the day.
Australia’s ASX 200 sank 1%, as data showed a sustained decline in export prices through the third quarter. Growing expectations of an interest rate hike from the Reserve Bank also rattled sentiment towards Australian stocks.
Azure Minerals Ltd (ASX:AZS) was among the few bright spots in Australian markets, rallying 43% after the firm said it had accepted an A$1.6 billion ($1 billion) takeover offer from Chile’s SQM (SN:SQMA)- the world’s largest lithium producer.
Futures for India’s Nifty 50 index pointed to a substantially weaker open, given its high exposure to U.S. tech. Indian stocks were hit particularly hard by a mix of profit taking and tech aversion over the past week.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.7% and 0.4%, respectively, on Thursday, after rebounding sharply from 2023 lows earlier this week.
News of more stimulus spending in China, after the government announced a 1 trillion yuan ($136 billion) bond issuance, had sparked a strong recovery rally in Chinese shares this week.
But the factors that had battered Chinese markets this year still remained in play, with investors continuing to fret over sluggish economic growth and a potential debt crisis in the property market.
