Asian Markets Attempt to Rebound, Hong Kong Index Drops to 1-year Low

Arjun Pandit
24 Oct, 2023
Mumbai

Asian markets traded mixed after U.S. Treasury yields edged lower and investors debated the rate path and its impact on global financial markets.

World financial markets have been on edge with the prospect of a wider conflict in the Middle East involving Lebanon, Iran, Turkey, Egypt, and Syria supporting Hamas and the U.S. supporting Israel.

Crude oil edged lower in Monday's trading after U.S. diplomats worked feverishly to arrange small aid for Gaza residents and hold off an Israeli military offensive, but tensions remained high in the region.

Israel said it carried out 324 targeted missile strikes in Gaza in the last 24 hours, and the Hamas-controlled Gaza health ministry said the civilian death toll reached 5,000.

With no end in sight for the Israel-Hams conflict, oil prices traded volatile amid worries of more violence in the region.

Benchmark indexes in Tokyo edged higher by 0.1%, and the closely watched manufacturing survey confirmed ongoing weak operating conditions in September.

The au Jibun Bank Japan Manufacturing PMI held at 48.5 in October, unchanged from the seven-month low reached in September.

The index declined for the fifth month in a row, primarily driven by weakness in new export orders and persistent weakness in domestic orders.

In addition, the backlog of orders declined for the 13th month in a row, with orders falling at a faster pace than in September.

 

China Stocks and Yuan Under Pressure

Market indexes in Hong Kong extended losses in 2023 due to persistent China growth worries and a steady stream of capital outflows.

The Hang Seng index declined 0.8% and the Shanghai Composite Index edged higher after China-controlled funds stepped up their purchases of ETFs on the Shanghai Stock Exchange.

In Hong Kong, tech stocks led stock decliners, and the benchmark index extended this year's loss to 15.9% after investors returned from a three-day holiday.

The Hang Seng index dropped to a 12-month low on the deepening malaise in the housing market, and the prospect of higher interest rates in the U.S. is draining interest in international investing.

Investors pulled out $5.1 billion this month, following the withdrawal of $75 billion in September, the most since December 2016, Goldman Sachs said in a research note.

In offshore trading, the yuan fell 0.03% to 7.30 against the U.S. dollar, and the tightly managed currency

Foreign investors withdrew $42 billion in August from the Chinese market, and the yuan has been under pressure for the last three months as the currency trades near its 16-year low.

Financial markets in India were closed to celebrate the Dassehra holiday, and the Sensex index fell sharply in Monday's trading, reacting to the rising U.S. bond yields and the worries of a wider conflict in the Middle East.

The Sensex index and the Nifty index declined 1.3% in Monday's trading, but the Indian rupee held firm against the U.S. dollar.

The KOSPI index in Seoul added 1%, and the ASX 200 index in Sydney edged higher by 0.2%.

Four leading banks in Australia—National Australian Bank, Westpac, Commonwealth Bank, and ANZ Banking—edged higher between 0.3% and 0.6%.

Mining companies BHP Group and Rio Tinto gained more than 1%, but Newcrest Mining Ltd. edged down 1.1%.