BANGKOK (AP) - On Wednesday, Tokyo's benchmark Nikkei 225 index plunged more than 4%, with shares across Asia also experiencing declines following a retreat on Wall Street. This sell-off was triggered primarily by significant losses in major technology stocks.
By midday, the Nikkei was down 4.7%, trading at 49,104.05. Notably, shares of Tokyo Electron, a computer chip maker, fell by 6.1%, while Advantest Corp., which specializes in semiconductor testing equipment, saw its stock drop by 10%. In South Korea, the Kospi index also declined, falling 3.7% to 3,977.24 as the nation's prominent tech firms mirrored the negative trends seen elsewhere. Samsung Electronics decreased by 4.4%, and SK Hynix witnessed a 2.7% dip, despite earlier gains related to its collaboration with Nvidia in artificial intelligence development.
Chinese markets were somewhat insulated from the losses. The Shanghai Composite index slipped marginally by 0.3% to 3,946.78, while Hong Kong's Hang Seng index fell 1.1%, ending the day at 25,656.90. Traders' apprehensions were heightened by the considerable sell-off in technology-related shares on Wall Street, where the tech sector has been pivotal in driving market gains this year. High valuations for companies like Nvidia and Microsoft significantly influence market direction.
In the U.S., Palantir Technologies' stock fell by 7.9%, despite better-than-expected financial results. Nvidia, after a notable rise the prior day, decreased by 4%, and Microsoft followed suit with a 0.5% decline. The S&P 500 index dropped 1.2% to 6,771.55. Although this index had recently achieved an all-time high, it remained over 15% higher for the year. The Dow Jones Industrial Average experienced a minor drop of 0.5%, closing at 47,085.24, whereas the tech-heavy Nasdaq fell by 2% to 23,348.64.
Investors on Wall Street are keenly focusing on corporate earnings. Approximately 75% of companies in the S&P 500 have reported earnings that generally surpassed analysts' expectations. However, Uber's shares plummeted by 5.1% following its earnings announcement, despite having reported results that outperformed forecasts. As the week progresses, additional major firms, including McDonald's, Expedia Group, and Qualcomm, are slated to release their financial results.
The recent corporate profit reports carry heightened importance due to the ongoing U.S. government shutdown, which has impeded the release of critical economic metrics. Investors and economists are striving to assess the health of the U.S. economy without the latest data related to inflation and employment.
This information vacuum has also compromised the Federal Reserve's ability to make informed decisions regarding interest rates. Consequently, uncertainty looms over whether the Fed will persist in cutting rates amid persistent inflation and a declining job market. Consumer prices rose by 3% in September—the most significant increase since January—while hiring has stalled, complicating the Fed's position. Lowering interest rates could bolster the economy but might also exacerbate inflation concerns.
The ongoing government shutdown has already led to a lack of employment data for September, and it is anticipated that data on consumer prices for October may also be absent. In the market, Tesla saw a 5.1% decline after Norway's sovereign wealth fund, one of its major investors, announced opposition to a proposed compensation package for CEO Elon Musk that could potentially be valued at $1 trillion over the next ten years.
Tesla's annual meeting on Thursday will also deliberate over numerous company proposals, though none have generated more contention than Musk's substantial pay package. Conversely, Yum Brands experienced a significant surge, jumping 7.3% after revealing its consideration to sell its struggling Pizza Hut unit.
In the pharmaceutical sector, Novo Nordisk's stock dipped by 1.8% following its raised bid to acquire Metsera, which increased by 20.5%. The competition in this acquisition involves rival Pfizer, whose shares fell by 1.5%. Furthermore, as of early Wednesday, U.S. benchmark crude oil decreased by 31 cents, trading at $60.25 per barrel, while Brent crude, the international standard, dropped by 28 cents to $64.16 per barrel.
Regarding currency exchanges, the dollar fell to 153.33 Japanese yen from 153.63 yen, and the euro rose to $1.1493 from $1.1488.
