Most Asian stocks experienced a decline on Tuesday, driven by profit-taking in the technology sector and uninspiring sentiment towards China’s economic outlook. The regional markets followed the overnight losses in Wall Street, where profit-taking and anticipation of further signals on U.S. interest rates prevailed. U.S. futures also dipped in Asian trade.
In China, the Shanghai Shenzhen CSI 300 and Shanghai Composite showed muted movements, while Hong Kong’s Hang Seng index plummeted by 2.5%. Investors grew more cautious as China set a 2024 gross domestic product (GDP) target of 5%, identical to the 2023 target, raising concerns about how the country plans to boost growth with a lower fiscal spending target.
These targets were revealed during the 2024 National People’s Congress, where additional measures to boost consumer spending and confidence were promised. However, the lack of significant changes from earlier policy assurances raised doubts about the effectiveness of China’s measures to support the economy. Additionally, private PMI data indicated slowing growth in China’s crucial services sector.
The concerns about China spilled over into broader Asian markets, impacting those with high trade exposure to the country. Australia’s ASX 200 initially gained but later fell by 0.2%. In India, futures for the Nifty 50 index suggested a muted open, with local tech stocks expected to track global weakness. However, the Nifty and BSE Sensex 30 index remained close to record highs achieved last week following strong GDP figures from India.
The technology sector’s profit-taking also affected South Korea’s KOSPI and Japan’s Nikkei 225, the latter coming down from record highs above 40,000 points. Weakness in tech stocks, driven by overnight losses in Apple Inc. (AAPL) following a $2 billion antitrust fine in Europe, contributed to the overall decline in these markets.