Most Asian stock markets slipped on Friday, driven by declines in technology shares after a feeble finish on Wall Street that dampened the risk appetite among investors. Moreover, investors’ sentiments are also subjected to the assessment of Tokyo inflation results, which places a significant spotlight on whether there will be more tightening from the Bank of Japan’s policy.
Read: Apple Shares Rise After Strong Sales Outlook Signals iPhone Recovery
Multiple regional markets, which have reported strong gains in January, dropped from multi-year or record highs amid profit-taking, with the Chinese shares leading the drops.
In the US, Wall Street closed lower last night, which pressurized S& P 500 and Nasdaq as Microsoft’s (NASDAQ: MSFT) shares dropped by 10%, raising concerns among investors that AI spending may not give proportionate returns. The growth of Microsoft’s cloud business was also lower than the expectations among market analysts. US stock index futures also dropped discreetly during Asian hours.
In Asia, the largest losses were incurred among Chinese shares. The Shanghai Composite and the blue chip Shanghai Shenzhen CSI300 slumped by 1% each. Hong Kong’s Hang Seng Index slipped by nearly 2%, with the Hang Seng Tech sub-index dropping similarly. Although Hong Kong shares were set to climb by 7% in January.
Singapore’s Straits Times Index also slipped down by 0.2% after reporting a record high in the earlier session. This index was also set to rise by 6% in every month.
Similarly, Australia’s S&P/ASX 200 index dropped by 0.6% and it was on track to gain 2% this month. Futures for India’s Nifty 50 index also reported a loss of 0.3%
Contrarily, South Korean shares increased, resisting the broader regional trend. The KOSPI acquired 0.5% due to powerful performance in heavyweight chipmakers. Samsung Electronics and SK Hynix(KS:000660) also extended gains after stellar earnings results recorded the previous day. The KOSPI index was all set for stellar gains of 25% this January.
In Japan, the Nikkei 225 index dropped by 0.4% while the TOPIX index recorded a loss of 0.3%. The Nikkei was set to increase by 5% in January, with some gains moderated by a stronger yen.
Tokyo’s Consumer Price Data on Friday has highlighted that inflation in the Japanese capital is reducing to its lowest level over the time period of four years. This indicates cooling price pressures while keeping an eye on Japan’s policy outlook.
The fundamental measure, which excludes fresh food, is closely monitored by the BOJ, also reduced from the last month but is maintained slightly above the central bank’s target of 2%. This highlights that inflation has not fully decreased.
In general, the market pullbacks demonstrate how investors are now cautious following large January returns, US Tech stocks appear weaker, and investors are now taking profits on the last 4 weeks of increases in the market. There now seems to be a focus on inflation data and the Federal Reserve’s direction for future activity, which will help to determine if Asian markets remain under current pressure or return to positive market momentum.
