Rosalind Evans
The stock markets in Asia faced a significant decline, with shares skidding on Thursday following the Wall Street tumble. This descent was fueled by the bond yields’ tightening grip coupled with mixed earnings reports from some of the most influential U.S. companies.
The results of the Asian markets were notable. Tokyo’s Nikkei 225 sank by 2.1%, settling at 30,628.04, while the Kospi in Seoul declined by 2.3% to 2,309.14. Hong Kong’s Hang Seng dropped 0.8% to 16,942.93, and the Shanghai Composite index gave up 0.3%, landing at 2,965.35. Sydney’s S&P/ASX 200 lost 0.8%, closing at 6,799.00. In Bangkok, the SET index declined by 0.8%, and Taiwan’s Taiex fell by 1.5%.
In the U.S., the S&P 500 experienced a 1.4% drop to 4,186.88, returning to its position in May. This drop significantly affected Big Tech stocks, dragging the Nasdaq composite down to its second-worst drop of the year, shedding 2.4% to 12,821.22. The Dow Jones Industrial Average was not spared, falling 0.3% to 33,035.93.
The 10-year Treasury yield was crucial in these events, rising back toward 5%, standing at 4.98%. This increase followed a dip to 4.82%. The 10-year yield has been increasing, catching up to the Federal Reserve’s primary interest rate, above 5.25% – its highest level since 2001.
These high yields have detrimental effects on the stock market, causing prices for stocks and other investments to whittle away, ultimately slowing down the overall economy and adding pressure to the financial system. These high yields most impact high-growth stocks such as internet-related and technology stocks. As evidence, Amazon experienced a 5.6% drop, Nvidia a 4.3% drop, and Apple a 1.3% drop. Even Alphabet, the parent company of Google and YouTube, witnessed a 9.5% decline in its stock despite reporting more substantial profits.
Conversely, Microsoft was an outlier, reporting more robust profit and revenue for the summer than analysts had predicted, resulting in a 3.1% increase in its stock. Microsoft’s movements are particularly significant given its status as the second-largest company by market value.
The turbulence in the Asian markets, fueled by the high yields and mixed earnings reports, is a stark reminder of the interconnectedness of global economies and financial systems. As the world watches and waits, the hope remains that the measures taken by central banks and other financial institutions will stabilize the economy without tipping it into a deep recession.
