Asian Stocks Show Decline amid Rising U.S. Treasury Yields

Most Asian stocks fell on Thursday as rising U.S. Treasury yields pressured technology stocks, while weak economic prints from several regional economies also weighed on sentiment.

Market Overview

Regional markets took a weak lead-in from Wall Street, as heavyweight technology stocks fell amid pressure from high yields, and increased risk aversion saw investors locking in recent profits. Uncertainty over a tight presidential race and a slower pace of interest rate cuts dented Wall Street in recent sessions. However, U.S. stock index futures rose in Asian trade, buoyed by positive earnings from Tesla Inc (NASDAQ:TSLA).

Asia Tech Tracks U.S. Losses

Tech-heavy bourses were the worst performers in Asian trade, tracking overnight losses on Wall Street.
– South Korea’s KOSPI lost 0.2%.
– Hong Kong’s Hang Seng index fell 0.7%.

Tech stocks were pressured chiefly by rising U.S. Treasury yields, as markets positioned for a slower pace of interest rate cuts by the Federal Reserve. The KOSPI was additionally affected by softer-than-expected GDP data from South Korea, which showed the economy barely grew in the third quarter.

Bright Spots

Despite the overall downturn, there were positive highlights:
– South Korean memory chip giant SK Hynix Inc (KS:000660) rose 1% after posting record third-quarter earnings driven by strong AI demand.
– In Hong Kong, Horizon Robotics surged 28% on their first trading day following a $696 million IPO, which is the biggest in Hong Kong for 2024.

Chinese electric vehicle stocks lagged even as rival Tesla rallied sharply in aftermarket trade.

Japanese Shares Muted after Soft PMIs

Japan’s Nikkei 225 index rose slightly, while the TOPIX lost 0.2% after PMI data showed unexpected contraction in business activity in October. Both manufacturing and services PMIs contracted during the month.

This weak reading was largely attributed to soft economic conditions in the country, with private spending appearing to cool after an initial surge earlier in the year. Sentiment towards Japanese stocks was tense ahead of a general election scheduled for this Sunday, where the ruling Liberal Democratic Party might need to seek a coalition to retain power. The Bank of Japan is also set to meet next week.

Broader Asian Markets

Broader Asian markets moved in a flat-to-low range with:
– China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.6% and 0.4%, respectively, losing steam after four straight days of gains due to optimism over stimulus measures.
– Australia’s ASX 200 rose 0.3% despite PMI data indicating a sustained contraction in manufacturing activity, although services activity grew at a slightly faster pace in October.
– Futures for India’s Nifty 50 index suggested a mildly positive open after three days of losses, with key Indian earnings reports expected later in the day, including from ITC Ltd (NS:ITC) and Godrej Consumer Products Ltd (NS:GOCP). Indian PMI data is also pending.