Asian Markets Tumble Following U.S. Rout

Arjun Pandit
19 May, 2022
New York City

Asian markets declined after the key index in the U.S. dropped more than 4%, the largest decline since June 2020. 

The fears of rising inflation hitting the corporate earnings and the lagging response from the Federal Reserve Bank added to market anxieties. 

Investors are worried on the one hand that the higher interest rates may slow down the economy but on the other hand if rates are not raised fast enough then inflation will get entrenched and eat into corporate earnings. 

These conflicting views have been feeding market uncertainty for the last eight weeks.   

Global market selloff sparked by the U.S. decline after two leading retailers Walmart and Target reported sharply lower earnings and highlighted rising operating costs.  

The earnings results and other economic indicators have been signaling that inflation is entrenching post-pandemic and slowing the economic activities. 

In Tokyo, the Nikkei index declined 1.9% to 26,402.82.

Tech and automakers led the decline in Tokyo and SoftBank Group fell 1.6% to 5,055.00 yen and Recruit Holdings Co fell 4.2% to 4,602.00 yen. 

Japan's trade deficit in April rose to 839.2 billion yen (about $7 billion) from the upwardly revised 414.1 billion in March. 

Exports increased 12.5% to 8.076 trillion yen or $63 billion and imports increased 28.2% to 8.915 trillion yen or $70 billion, the Ministry of Finance reported today. 

Imports were the largest since record keeping began in 1979. 

Japan recorded a monthly deficit for the ninth month in a row and swung from a surplus of 227 billion in April 2021. 

Core machine orders rose 7.6% in March to 869.5 billion yen, the Cabinet Office reported today. 

In Hong Kong the Hang Seng Index fell 2.5% to 20,120.68, the largest decline since May 6. Hang Seng Tech index fell 4% but the Shanghai Composite Index gained 0.4%, the only gainer in Asian markets. 

Ten Cents plunged 6.5% after the operator of Chinese super app WeChat  reported flat revenues in the first quarter and a 51% plunge in net income. 

The weak results reflected the fallout from the resurgent Covid-19 virus,  the impact of the year-long regulatory crackdown on tech companies, and the headwind from the macro economy.  

The weak results from Ten Cents dragged down other tech stocks. 

Alibaba Group Holdings fell 7.3%, NetEase declined 2.5%, and Meituan dropped more than 3.7%. 

In economic news, Hong Kong unemployment rate increased to 5.4% in three months to April from 5.0% in the previous three months. 

Under employment increased to 3.8% in three months to April from 3.1% in the previous three months to March. 

In Seoul, the Kospi index declined 1.3% to 2,592.34. 

In Sydney, the ASX 200 index fell 1.7% to 7,064.50 after retailers plunged. Wesfarmers dropped 8% to an 18-month low, Coles declined 5%, and furniture retailer Norman declined 5.5%.  

The Sensex index declined 2.6% or 1,416.30 to 52,792.23 and the Nifty index fell 2.65% or 430.95 to 15,809.32. 

Tech stocks dropped between 5% and 7% following the decline in the U.S.

Tata Consultancy Services dropped 5% to 3,271.90 rupees, Infosys declined 5.2% to 1,431.03 rupees , Tech Mahindra fell 5.03% to 1,113.04 rupees, and HCL Tech plunged 5.8% to 1,011.40 rupees.

Metal and materials stocks also declined more than 4%. 

Hindalco fell 4.4% to 417.20 rupees, Tata Steel declined 4.3% to 1,128.95 rupees, and JSW Holdings fell 3.2% to 3,465.05 rupees.