Sarah Travers
Global markets faced a tumultuous day of trading on Friday as Asian stocks plummeted, spurred by escalating tensions in the Middle East and concerns over rising bond yields. Japan’s Nikkei index led the decline, dropping a staggering 3.5% due to heavy selling of semiconductor-related shares and other market heavyweights. The region’s sentiment was further dampened by reports of Iran firing air defense batteries near Isfahan, leading to a $3 surge in oil prices.
In Japan, semiconductor equipment supplier Lasertec suffered the largest losses, plummeting 9.7% in morning trading. Other tech-related shares, including Renesas, Tokyo Electron, and Sony Group Corp., also experienced significant declines. Additionally, Toyota Motor Corp saw its shares dip by 3.7%.
Economic signals from Japan contributed to market apprehension, as the nation’s headline inflation rate eased to 2.7% in March. The core-core index, which excludes volatile components like fresh food and energy, also softened to 2.9%, marking the first instance since November 2022 that it dipped below 3%. Despite these developments, the Japanese yen experienced a slight strengthening against the U.S. dollar.
Investor attention remains focused on the Japanese central bank’s next move following its recent benchmark interest rate hike, the first in 17 years. Despite this increase, the rate remains near zero, prompting speculation about further monetary policy shifts.
Elsewhere in Asia, Australia’s S&P/ASX 200 dropped 1.7%, South Korea’s Kospi fell 2.9%, Hong Kong’s Hang Seng declined 1.4%, and the Shanghai Composite edged down 0.1%.
On Wall Street, the S&P 500 extended its losing streak to five consecutive sessions, slipping 0.2% to 5,011.12. The Dow Jones Industrial Average managed a modest gain of 0.1% to 37,775.38, while the Nasdaq composite declined by 0.5% to 15,601.50.
Equifax and Las Vegas Sands were among the biggest losers in the S&P 500, with Equifax experiencing an 8.5% drop after reporting weaker-than-expected revenue for the latest quarter. Las Vegas Sands sank 8.7% despite posting better-than-expected results, as concerns mounted over competition in the Macau market.
On the positive side, Elevance Health saw a 3.2% increase after raising its profit forecast for the full year. Genuine Parts experienced the biggest gain in the S&P 500, jumping 11.2% following stronger-than-expected profit reports and an upward revision of its forecasted profits for the year.
The stock market’s struggles are partly attributed to rising yields in the bond market, which have intensified pressure on equities. Investors have tempered their expectations of Federal Reserve interest rate cuts, following recent reports indicating a stronger-than-expected U.S. economy.
Reports released on Thursday revealed that fewer workers applied for unemployment benefits, signaling continued strength in the job market despite high interest rates. Additionally, growth in manufacturing in the mid-Atlantic region exceeded expectations, while sales of previously occupied U.S. homes declined less than anticipated.
The Federal Reserve’s stance on interest rates has shifted, with top officials suggesting they may maintain high rates until inflation trends lower. This represents a departure from earlier indications of potential rate cuts, reflecting the Fed’s commitment to ensuring inflation aligns with its 2% target.
In oil trading, both U.S. benchmark crude and Brent crude saw significant price increases, with U.S. crude rising $2.77 to $85.50 per barrel and Brent crude gaining $3.40 to $90.51 per barrel. Meanwhile, the euro weakened against the U.S. dollar, dropping to $1.0623.
