As reported by Bloomberg, Wall Street equities tanked on Wednesday, wiping out the year’s gains for the S&P 500 and the Dow Jones Industrial Average, and the Pacific-Asia market session followed suit on Thursday, with the MSCI Asia-Pacific index falling by 2.2% for the day, bringing the index’s total losses on the year to -21%.
Key highlights
Asian equity indexes across the board are back into bearish territory, with Japan’s major bourses shedding between 2 and 3% for Thursday, and Japan’s Topix index had its worst single-day performance since September of last year, and on the US side the NASDAQ Tech Composite declined 4.4%, it’s single worst day since late 2011.
According to Bloomberg, the US-China tradewar, while a major cause for concern for investors, is not the only bearish headwind at work in Asia: a rising Greenback is seeing outflows from Asian equities, forcing central banks within the region to begin raising interest rates to cut off the hemorrhaging, exacerbating the declines.
The Federal Reserve is also playing its part in the carnage, with a hawkish stance on interest rates leaning the US central bank into four rate hikes next year according to the current dot-plot, and concerns that rising US interest rates could wreak further havoc on global markets are currently rising to the surface.
“We still do not know the full outcome of this trade war as the U.S. and China act and react with rhetoric,” said Jim McCafferty, the head of equity research for Asia ex-Japan at Nomura Holdings Inc. “U.S. tech names are also highly volatile, so it is inevitable that this volatility will spread to the supply chain in Asia.” – Bloomberg
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