Hong Kong’s Hang Seng fell 2.8 percent, leading to losses in the region. Japan’s Nikkei also fell more than 2%. The Korean Kospi fell 1.6%. China’s Shanghai Composite Index fell 1%.
The US stock market had a sharp sell-off on Wednesday as investors became increasingly concerned about rising inflation and a possible economic recession. The Dow Jones Industrial Average lost 3.6%, its worst trading day since June 2020. The S&P 500 sank 4% and the Nasdaq Composite fell 4.7%.
Stock futures continued their downward trend on Thursday morning in Asia. Dow futures fell 0.4%. S&P 500 and Nasdaq futures fell 0.5% and 0.8%, respectively.
Rising inflation in the United Kingdom and Canada was “a reminder to markets that fighting global central bank inflation will be a challenging process,” said Jun Rong Yep, market strategist at IG Group, on Thursday.
“The increase in Covid-19 cases in China appears to undermine earlier hopes of a quick easing of general restrictions on viruses, potentially contributing to market risk aversion,” he added.
China’s economy is likely to shrink in the second quarter as Covid’s blockade causes chaos. Consumer spending and factory production plummeted last month as unemployment rose to its highest level since the initial coronavirus epidemic in early 2020. A senior Chinese official tried to lift the spirits of his huge technology industry once again on Thursday. But markets were still deeply concerned about the growth prospects of the country’s major Internet companies.
These fears intensified on Wednesday when Tencent reported zero revenue growth in the first quarter, worse than expected.
“Despite recent assurances from the Chinese authorities, the relief in Chinese technology has been short-lived so far, as market participants expect more concrete policies to restore long-term confidence,” Yep said.
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