Rate Worries Drag Down Nikkei 1%, China's Surge In Exports Fail to Halt Market Slide

Arjun Pandit
07 Mar, 2024
Mumbai

Asian markets traded mixed amid rate uncertainties, rising geopolitical tensions between China and the U.S., and growing worries of deflation in China. 

U.S. Federal Reserve Chairman Jerome Powell reiterated the central bank's stance to hold interest rates but confirmed that rates are likely to go down later in the year. 

Powell added that it is too early to discuss a rate cut until there are signs of a sustained decline in inflation to 2%. 

In addition, later in the day, the European Central Bank is set to announce its rate decision and growth outlook. 

Investors are looking for the central bank to hold rates steady, which may provide insights into the future direction of interest rates. 

 

Nikkei In Tokyo Turned Lower Amid BoJ Rate Decision Speculations 

Benchmark indexes in Tokyo traded at a new intra-day high before receding after the yen fell below 149 against the dollar in the hopes that the Bank of Japan is likely to end its ultra-loose monetary policy as early as this month. 

Investors also reacted negatively to the real wage decline of 0.6% in February. Real wages fell for the 22nd month in a row, but the decrease was the smallest in eleven months amid weakening goods and service prices in the economy. 

The Nikkei 225 Stock Average declined 1.3% to 39,593.69, and the Topix index fell 0.4% to 2,718.23. 

Financial stocks trimmed gains in the afternoon trading, and Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Financial Group rose between 1% and 3%. 

Tech stocks were among the leading decliners, and Advantest, Tokyo Electron, Screen Holdings, and Disco Corp. dropped between 3% and 6%. 

SoftBank bucked the trend and gained 1.4% to ¥8,997.0. 

 

China Stocks Extend Weekly Losses 

Stocks in Shanghai and Hong Kong struggled to stay above the flatline amid rising geopolitical tensions. 

Market sentiment was dented after lawmakers in the annual parliamentary session failed to announce specific stimulus to stabilize financial markets. 

Investors overlooked stronger-than-expected exports in the January–February months, and the smaller-than-expected increase in imports suggested persistent broader economic weakness. 

The U.S. Senate committee advanced a bill that will prevent federal agencies from doing business with certain Chinese biotech companies linked to "foreign adversaries."

The CSI 300 index decreased 0.4% to 3,536.13, and the Hang Seng index fell 0.6% to 16,339.12. 

Wuxi Biologics plunged 21.2% to HK$17.12 and Wuxi AppTec plunged 17% to HK$46.85, extending this year's losses to 40% and 38%, respectively. 

JD.com jumped 6% to HK$95.30 after the e-commerce company reported better-than-expected earnings. 

BYD declined 1.9% to HK$190.0 after the electric vehicle maker announced its plan to buyback 400 million yuan, or $55.5 million, of its shares. 

 

China's Goods Exports Surpass Estimates

China's exports and imports rose more than expected during the January–February period. 

China's exports soared 7.1% to $528 billion in the two-month period, following a 2.3% increase in December, the General Administration of Customs reported Thursday. 

China's trade surplus in the two-month period soared to $125.2 billion from $104.4 billion in December. 

In 2023, China's exports eased 4.6% to $3.38 trillion and imports declined 5.5% to $2.56 trillion, resulting in a trade surplus of $823 billion. 

 

India's Economic Growth Likely to Surpass Target Rate

Stocks in Mumbai opened higher tracking gains in overnight trading in New York. 

The Sensex and the Nifty indexes danced around the flatline as investors debated interest rate outlooks at home and abroad. 

Market sentiment was positive after Reserve Bank of India Governor Shaktikanta Das, in an interview with ETNow on Wednesday, said fiscal fourth quarter economic growth is likely to surpass the 5.9% estimate suggested by the statistical agency. 

Governor Das added that there is a "good chance" that fiscal year 2024 economic growth will be "close to 8.0%," but he reiterated the fiscal 2025 outlook at 7.0%. 

The Sensex index increased 0.02% to 74,108.98, and the Nifty index rose 0.03% to 22,482.90.

On the Mumbai stock exchange, 61 stocks traded at their 52-week highs and 21 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds increased to 7.05%, and the Indian rupee strengthened to ₹82.82 against the U.S. dollar.