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Asian Stocks Hit by Rate Jitters, China Extends Losses

Most Asian stocks experienced declines on Friday, mirroring the weakness observed in Wall Street, as concerns over persistent U.S. inflation and the likelihood of high interest rates dampened investor sentiment towards risk-driven assets.

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China’s Extended Losses:

Chinese markets continued their downward trend from the previous session, with both the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes falling by 0.4% and 0.2%, respectively. This decline follows steep losses on Thursday, fueled by escalating trade tensions with the U.S. and military exercises near Taiwan, exacerbating apprehensions among investors.

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Tech Rout in Hong Kong:

Hong Kong’s Hang Seng index faced significant losses, particularly in heavyweight technology stocks, extending a tech rout. The index plummeted by 1.5% on Friday, compounding a 1.7% drop from the previous day. Alibaba Group fell by another 1% after announcing a $5 billion issuance of convertible bonds to drive growth. The negative sentiment spilled over to peers Baidu Inc and Tencent Holdings Ltd, while profit-taking in property stocks added to the market’s woes.

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Broader Asian Market Decline:

Across the broader Asian markets, losses persisted as investors recalibrated their expectations for U.S. interest rate cuts following hawkish signals from the Federal Reserve. Australia’s ASX 200 shed 1.1%, while Japan’s Nikkei 225 and TOPIX declined by 1.1% and 0.5%, respectively. Japan’s sentiment was further dampened by soft consumer inflation data in April, reflecting ongoing spending weaknesses. Futures for India’s Nifty 50 index signaled a weak opening, suggesting profit-taking after reaching record highs on Thursday.

Samsung’s Troubles Impact KOSPI:

Samsung Electronics Co Ltd dropped over 2% after reports indicated that its high bandwidth memory (HBM) chips did not meet Nvidia’s standards due to heating and power issues. This setback raised concerns about Samsung’s ambitions in the advanced HBM chip market, which is poised for significant growth driven by artificial intelligence. Consequently, South Korea’s KOSPI index slid over 1%, with Samsung’s peer SK Hynix Inc also experiencing a slight decline.

In summary, the Asian markets grappled with rate jitters and escalating geopolitical tensions, resulting in widespread losses across various sectors.

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