|

Asian stocks trade mixed, AI stocks and oil prices in focus

  • Asian stocks trade mixed on Tuesday. 
  • Warnings from AI leaders about a slowdown in AI development weigh on the market. 
  • Elevated oil prices and higher bond yields add to caution ahead of Fed and BoJ policy meetings this week. 

Asian equities trade mixed on Tuesday as traders weighed Middle East tensions and calls by industry figures for a slowdown in AI development. Crude oil extended its rally and Asian bonds tracked US Treasuries lower as a surge in oil prices revived inflation concerns and strengthened bets on a US Federal Reserve (Fed) interest-rate hike.

High energy prices weighed on Asian bonds, with government debt in Australia opening lower. Australia's S&P/ASX 200 fell 0.75% to 8,685. 

"Markets are likely to remain focused on the risk that higher crude oil prices could add to inflationary pressures and, in turn, push interest rates higher," said Yokoo Akihiko, analyst at Mitsubishi UFJ Bank, in a note. 

Asian markets remain volatile after leading AI figures warned they will slow development for the safety of humanity. Anthropic PBC chief executive officer, Dario Amodei, said that development of the most advanced systems must be slowed in order to prevent AI slipping beyond human control and inflicting catastrophic harm.

“The prospect of a coordinated slowdown in AI development remains uncertain, given intense competition both among U.S. firms and between the U.S. and China,” Ng Jing Wen, analyst at Mizuho Bank, said in a report.

Meanwhile, the South Korean stock, the benchmark KOSPI, gained 0.04% to 6,685. India’s Nifty50 was up 0.27% to trade at 23,462 on Tuesday. In Taiwan, the Taiex declined by 0.27% to 45,735. 

China and Hong Kong stock markets lost momentum on Tuesday, with the SHANGHAI, China’s main stock market index, dropping by 0.10% to 3,881. The Hong Kong Stock Exchange decreased by 0.23% to 24,860. 

The Nikkei 225, Japan’s benchmark, rose 0.36% to 63,715. The Bank of Japan (BoJ) is widely expected to raise its policy rate to 1.25% from 1.0% on Friday as policymakers grow increasingly worried about inflation overshooting the BoJ's 2% target. This move would mark its fastest rate increase yet in the current cycle.

(This story was corrected on September 15 at 04:45 GMT to say, in the first bullet point, that Asian stocks trade mixed on Tuesday, not Monday.)

Asian stocks FAQs

Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.

Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.

Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.

Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.

Author

Lallalit Srijandorn

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

More from Lallalit Srijandorn
Share:

Editor's Picks

AUD/USD edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY declines toward 157.00 as Yen gathers strength after BoJ

The Japanese Yen gathers strength on Friday, with USD/JPY falling toward 157.00 in the second half of the day. The Bank of Japan (BoJ) decided to leave monetary policy settings unchanged at the October meeting, as expected. In the post-meeting press conference, BoJ Governor Ueda reiterated that they will continue to raise the policy rate and adjust the degree of monetary easing in reponse to economic activity and prices.

Gold slips below $4,000 despite risk-off mood as hawkish Fed expectations weigh

Gold (XAU/USD) remains under pressure on Friday, slipping to $3,965 during Asian trading hours, its lowest level since July. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory. At the time of writing, XAU/USD trades around $3,979, down nearly 1% on the day.

The hawkish Fed can't lift the US Dollar anymore
About three more Federal Reserve hikes are already priced in, and the central banks behind the Euro, Pound, Yen and Loonie are raising rates or about to. That leaves the US Dollar Index with little to gain if the Fed keeps leaning toward higher rates.
Binance hack shakes crypto, but XRP pullback may not be so bearish
Crypto markets were hit by a big headline overnight. Binance confirmed a security incident in which a compromised engineer's laptop led to unauthorized withdrawals, with an estimated impact of around $6.3 billion. About $3 billion has been frozen so far, Binance says it will cover the losses, and withdrawals were paused while security checks are completed.
A hot US economy is supposed to sink Gold. It didn't. Here's why
Gold (XAU/USD) remains under pressure near $4,000, as stronger-than-expected United States (US) economic data reinforce expectations of another Federal Reserve (Fed) interest rate hike in December. Economic growth is accelerating, inflation remains elevated, and borrowing costs could rise further.