Asian Stocks Fall Sharply

Asian stocks fell sharply on Thursday, with technology shares leading losses after the Federal Reserve projected a slower pace of interest rate cuts in 2025, creating a tougher environment for risk-driven markets.

However, Japanese markets trimmed some initial losses as the yen weakened after the Bank of Japan (BOJ) kept interest rates steady in its final meeting for the year.

Regional stocks tracked an overnight tumble on Wall Street after the Fed cut rates by 25 basis points as expected but indicated a significantly slower pace of cuts in the coming year.

Tech Stocks Suffer Major Losses
Tech stocks were the most affected, as investors locked in profits from a recent run-up in the sector. The NASDAQ Composite fell 3.6%, marking its worst day in nearly five months. U.S. stock index futures were flat during Asian trade.

Japanese Stocks Trim Losses as BOJ Holds Rates

Japan’s Nikkei 225 and TOPIX indexes fell 0.5% each after dropping over 1% earlier in the session.

The local markets managed to trim their losses after the BOJ maintained steady interest rates, signaling caution over Japan's economic outlook and inflation path. The central bank anticipates inflation will rise in 2025 and remain close to its 2% target.

The BOJ's decision disappointed some investors expecting a December hike, but stable rates in the near term could be positive for Japanese stocks. The yen weakened following the BOJ's decision, which benefits export-driven sectors.

The BOJ had previously raised rates twice in 2024, marking a historic shift from ultra-loose monetary policy. Governor Kazuo Ueda has signaled further rate increases may occur, though the precise timing remains unclear.

Asian Tech Slumps on Fed Jitters, Micron Weakness

Tech-heavy markets were the poorest performers in Asia, mirroring steep overnight declines in U.S. markets.

South Korea's KOSPI index dropped 1.7%, with market sentiment fragile amid political turmoil after President Yoon Suk Yeol was impeached over an unsuccessful attempt to impose military rule.

Memory chip giants SK Hynix Inc and Samsung Electronics Co Ltd weighed heavily on the KOSPI, losing 3.8% and 2.7%, respectively. Both companies were affected by a 16% plunge in U.S. peer Micron Technology Inc, whose quarterly revenue guidance missed expectations, raising concerns over the resilience of artificial intelligence demand amid global economic headwinds.

Losses in tech and chipmaking sectors pulled Hong Kong’s Hang Seng Index down by 1%.

Chinese markets also retreated, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes losing 0.4% and 0.7%, respectively. However, larger losses in Chinese stocks were offset by optimism over Beijing's plans for increased fiscal spending in 2025.

Australia’s ASX 200 fell 1.8%, while Singapore’s Straits Times Index lost 0.2%. Futures for India’s Nifty 50 index pointed to a mildly positive opening, expecting some relief after three consecutive days of losses.