On Monday, most Asian stocks experienced a retreat as strong labor market data and relatively hawkish comments from Federal Reserve Chair Jerome Powell led traders to diminish expectations of early interest rate cuts. Pessimism regarding China added to the negative sentiment, with a private survey indicating that services sector activity in the country grew less than anticipated in January.
In China, the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes faced losses of 1% and 2.4%, respectively. Technology and property stocks weakness primarily drove the decline, with both indexes reaching five and four-year lows. Chinese markets have been underperforming their global peers amid concerns over slowing economic growth.
Australia’s ASX 200 slid 0.9%, experiencing profit-taking after reaching a record high the previous week. South Korea’s KOSPI fell 1.3% following the country’s financial watchdog’s crackdown on what it considered irresponsible risk management. Hong Kong’s Hang Seng index dropped 0.7%, and futures for India’s Nifty 50 index indicated a weak open due to pressure from heavyweight tech stocks.
Federal Reserve Chair Jerome Powell’s comments on Sunday, expressing a prudent approach to cutting interest rates, and the stronger-than-expected nonfarm payrolls report for January contributed to a decline in rate cut expectations. Powell noted the central bank’s intention to be cautious, considering the economy’s resilience and higher inflation.
Japan’s Nikkei 225, however, bucked the trend, aided by purchasing managers index data revealing better-than-expected growth in the country’s services sector in January. The Nikkei 225 remained close to a 34-year high, having outperformed global peers through 2023 and early 2024.