February 8, 2018
The rebound in Asian markets stalled on Wednesday (Feb 7), with several indexes in the region finishing the session in negative territory.
Japan’s Nikkei 225 closed barely in positive territory after rising more than 3 percent earlier in the day, while South Korea’s Kospi reversed early gains to finish the session lower by 2.31 percent at 2,396.56.
Hong Kong’s Hang Seng Index erased early gains to track lower by 0.76 percent at 3:04 p.m.
Hong Kong-listed shares of Chinese banks were also in negative territory before the close, with China Construction Bank and Bank of China lower by 1.92 percent and 1.37 percent, respectively.
Meanwhile, mainland markets extended losses after last session’s sell-off. The Shanghai composite declined 1.81 percent to close at 3,309.58 and the Shenzhen composite shed 0.68 percent to end at 1,714.39. The blue chip CSI 300 index finished lower by 2.38 percent.
Mainland financial stocks took a beating and were among the worst-performing sectors on Wednesday: Shares of Bank of China listed in Shanghai fell 3.57 percent and Industrial and Commercial Bank of China lost 5.94 percent by the end of the day. Among insurers, Ping An Insurance Group finished the session down 3.32 percent.
The slump comes after Asian markets showed signs of recovery on Wednesday morning following a rebound on Wall Street.
“The market hasn’t fully recovered from the aftermath of the global equities rout,” Hiroaki Hiwada, a strategist at Toyo Securities Co. in Tokyo told Bloomberg. “It’s easy to have selling on a rebound as the market sentiment remains fragile especially after the massive selloff” of the past two days.
The United States’ leading stock market index, the Dow Jones Industrial Average index, plunged 1,175 points on Monday (Feb 5).
The stock market sell-off accelerated on Friday when the US Labour Department released employment numbers which showed stronger growth in wages than was anticipated, the Statesman reported quoting IANS.
This triggered fears that inflation would be pushed higher and that America’s central bank would need to raise interest rates in order to keep it under control.
Monday’s sell-off was driven by firms moving to sell stocks to put more money into assets such as bonds which benefit from higher rates, says Erin Gibbs, portfolio manager for S&P Global Market Intelligence, according to IANS.
“This isn’t a collapse of the economy. This isn’t a concern that markets aren’t going to do well, or that corporate America isn’t going to do well,” she said.
“This is concern that the economy is actually doing much better than expected and so we need to re-evaluate.”