Stocks
Asian markets track tech-led plunge on Wall St, yen extends gains
Asian markets tumbled Thursday after a tech-fuelled sell-off saw Wall Street tank, as disappointing earnings caused traders to panic that a months-long rally in the sector may have been overdone.
Tokyo’s Nikkei led the retreat in equities, with a stronger yen adding to the downward pressure on exporters, while technology giants across the region were deep in the red.
Global stocks have pushed ever higher this year — with New York’s three main indexes hitting multiple records — with tech titans such as Alphabet and chip makers such as Nvidia and TSMC boosted by an explosion of interest in all things linked to artificial intelligence.
The rallies have been helped by blockbuster profits and upbeat outlooks, causing investors to pile more cash in owing to a fear of missing out.
However, with valuations pushing to dizzying heights, analysts have been warning about retreat, and Tuesday’s earnings from Tesla and Google-parent Alphabet provided a selling opportunity.
Tesla said profits fell 45 percent in the second quarter owing to price cuts and aggressive AI investment and while Alphabet beat forecasts, results from YouTube were less upbeat.
The two firms are part of the so-called “Magnificent Seven” tech kings who have been key to the driving gains in markets this year. Tesla shed 12.3 percent and Alphabet gave up five percent.
All three main indexes on Wall Street tumbled, with the Nasdaq shedding more than three percent and the S&P 500 down more than two percent in its worst day since December 2022.
“Investors are now facing the pressing question: How long will it take for these massive investments by hyperscalers to start delivering over-the-top results?” asked analyst Stephen Innes.
“Patience is becoming the new flag-bearer for recent tech stockholders as they wait for these tech bets to pay off,” he added in his Dark Side Of The Boom newsletter.
Asia followed suit, with tech firms among the big losers — Seoul’s SK Hynix dived more than eight percent at one point despite strong earnings, while in Tokyo Sony was off more than four percent and SoftBank more than seven percent.
Hong Kong and Shanghai fell even after a surprise cut in a key rate by the Chinese central bank.
Sydney, Seoul, Singapore, Wellington, Manila and Jakarta were also well in the red.
The Nikkei in Tokyo tumbled more than three percent at one point.
Hideyuki Suzuki, senior analyst at SBI Securities, told AFP that “falls in the US tech sector — especially a plunge in Tesla shares, and disappointing Alphabet earnings — as well as a stronger yen weighed on the market.”
The boom in electric vehicle sales is slowing, and “excessive expectations for AI and other technologies are being corrected,” he said.
However, he added that “it’s not that economic fundamentals are worsening, so shares may rebound after” Japanese and US central bank meetings.
“The yen is higher on speculation that the Bank of Japan may hike interest rates” at its meeting next week, but views are divided, Suzuki said.
The yen extended a rally against the dollar that has been underway in recent weeks, having hit a nearly four-decade low near 162 at the start of this month.
The Japanese unit strengthened to as much as 152.65 per dollar at one point, with Innes saying “traders seem to have shifted from squaring short yen positions to taking long yen bets” ahead of the meeting.
Market watchers are divided on whether Japan’s central bank will raise interest rates again as officials look to normalise their longstanding ultra-loose monetary policy.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 2.5 percent at 38,165.19 (break)
Hong Kong – Hang Seng Index: DOWN 1.5 percent at 17,058.26
Shanghai – Composite: DOWN 0.9 percent at 2,875.61
Euro/dollar: DOWN at $1.0839 from $1.0842 on Wednesday
Pound/dollar: DOWN at $1.2890 from $1.2905
Dollar/yen: DOWN at 152.89 yen from 153.99 yen
Euro/pound: UP at 84.09 pence at 84.08 pence
West Texas Intermediate: DOWN 0.4 percent at $77.30 per barrel
Brent North Sea Crude: DOWN 0.4 percent at $81.40 per barrel
New York – Dow: DOWN 1.3 percent at 39,853.87 (close)
London – FTSE 100: DOWN 0.2 percent at 8,153.69 (close)
Asian investors trod cautiously Monday as they struggled to build on recent equity gains, with debate swirling around how big an expected US interest rate cut will be this week, while sentiment was being dragged by worries about the Chinese economy.
The yen edged to a new high since December ahead of the Federal Reserve decision on Wednesday and a policy meeting at the Bank of Japan two days later.
Data showing US inflation slowed more than expected last month to its weakest pace since February 2021 has sparked fresh talk that Fed officials will announce a bumper 50-basis-point cut and continue easing into the new year.
However, while bets on such a move have risen, some analysts warned that it could send a signal that decision-makers are worried about the economy, particularly after two readings showing the labour market was softening.
While bank officials have played their cards close to their chest, they have hinted that they are willing to discuss a bigger cut, while former New York Fed chief Bill Dudley said he thought “there’s a strong case for 50”.
Michael Krautzberger at AllianzGI said: “The Fed, like other central bankers, are now focused on economic growth rather than inflation risks and becoming increasingly worried about being behind the curve on policy — cutting rates too late to avert a recession or sharper growth slowdown.
“Therefore, in our view, the risks of larger rate cuts at subsequent meetings this year cannot be discounted, especially if labour market activity deteriorates faster than currently expected and inflation continues to head towards target.”
All three main indexes on Wall Street pushed higher Friday, with the Dow and S&P 500 within a whisker of their record highs.
But Asian investors were unable to extend the rally, with Hong Kong, Singapore and Wellington down but Sydney, Taipei and Manila edging up.
Trade was muted by holidays in Tokyo, Shanghai, Jakarta and Seoul.
On currency markets the yen hit 140.43 per dollar, its strongest level since the end of December, while gold remained at all-time highs after hitting a record $2,586.10 per ounce Friday.
Traders are keeping tabs on developments in China after more weak data on credit, retail sales, industrial production and house prices stoked concerns about the state of the world’s number two economy.
The figures “collectively add to concerns that policy measures announced in recent weeks and months have so far failed to have any measurable impact in lifting economic growth thus far in the third quarter after the weak second quarter performance”, said National Australia Bank’s Ray Attrill.
He added that investors will be keenly watching the government’s upcoming Politburo meeting — the date of which has yet to be set.
In light of the latest batch of disappointing figures, the central bank outlined plans to support the economy, saying it will “make maintaining price stability and pushing for the mild rebound in prices an important consideration for monetary policy and meet reasonable financing demand for consumption in a more targeted way”.
The Fed’s decision is set to be followed by the BoJ on Friday, with most analysts expecting it to hold rates after a surprise hike at the end of July sparked turmoil on markets.
“A consecutive hike would likely be seen as too aggressive, especially given criticism that the BoJ’s hawkish stance contributed to global market turbulence in early August,” said IG analyst Tony Sycamore.
“That said, stronger-than-expected inflation and wage growth in Japan over the past month have given the BoJ confidence in a wage-price cycle that could keep inflation above two percent, paving the way for more policy tightening.”
– Key figures around 0230 GMT –
Hong Kong – Hang Seng Index: DOWN 0.6 percent at 17,271.92
Tokyo – Nikkei 225: Closed for a holiday
Shanghai – Composite: Closed for a holiday
Dollar/yen: DOWN at 140.53 yen from 140.76 yen on Friday
Euro/dollar: UP at $1.1088 from $1.1079
Pound/dollar: UP at $1.3141 from $1.3125
Euro/pound: DOWN at 84.37 pence from 84.40 pence
West Texas Intermediate: UP 0.5 percent at $68.98 per barrel
Brent North Sea Crude: UP 0.4 percent at $71.86 per barrel
New York – Dow: UP 0.7 percent at 41,393.78 (close)
London – FTSE 100: UP 0.4 percent at 8,273.09 (close)
Khan Brothers PP Woven Bags has raised eyebrows after a significant and unexpected surge in its share price, despite the company posting losses and not declaring dividends for the last two fiscal years, including 2022-23. Over a brief period of just 14 trading sessions, from 25 August to 15 September, the company’s stock saw an extraordinary rise of 150%, closing at Tk176.2 on Sunday.
In light of this unusual price movement, the Bangladesh Securities and Exchange Commission (BSEC) has requested the Dhaka Stock Exchange (DSE) to conduct an investigation. The BSEC noted suspicious fluctuations in both the price and trading volume of Khan Brothers’ shares and called for an inquiry to uncover possible causes, including potential market manipulation or insider trading.
The DSE is required to submit a detailed investigation report to the BSEC’s Surveillance Department within 30 working days. Furthermore, the exchange has been directed to alert its AR/Compliance Officer or CEO of any irregular trade activities that may point to violations of securities regulations.
This is not the first time Khan Brothers’ shares have seen a steep rise. Earlier this year, in mid-February, the stock price surged to Tk231 before dipping below the face value of Tk10 by April. On 25 August, the shares traded at Tk78.4, only to climb again and hit Tk176.50 on Sunday, representing a 5.94% increase, or Tk9.9 per share.
Despite the sharp rise, the company reported a loss of Tk20 lakh during the first nine months of the 2023-24 fiscal year. Previously, the DSE issued query notices regarding the stock’s rising price on 10 July and 1 September. The company responded that no undisclosed price-sensitive information existed to explain the surge.
Khan Brothers PP Woven Bags Industries, which went public in 2014, raised Tk20 crore through its listing to fund machinery purchases, building construction, and debt repayment.
Dhaka Stock Market DSE, Bourse on the first working day of the week, 15th September, ended with a mixed performance in Indices and hike in Turnover from the previous working session. This information is known from DSE sources.
668 crore 95 lakh taka shares were traded on this day. 64 crore 43 lakh less tradings were done in DSE today compared to the previous workday, 12th September, Shares worth Tk 733 crores 39 lakh shares were traded last time, Thursday.
The benchmark DSEX lost 14.74 points or 5,726 The Shariah-based index DSES gained 1 point or 1,246 and the blue-chip index DS30 decreased by 15.22 points or 2,085.
Of the issues traded, 169 advanced, 182 declined and 46 remained unchanged.
SK Trims & Industries Limited ranked top gainer on DSE, the share price increased by Tk 1.70 paisa or 10.00 percent. On this day, the share was last traded at Tk 18.70 paisa.
Trust Bank 1st Mutual Fund ranked top loser on the DSE, the unit price dropped by Tk 0.40 paisa or 9.30 percent. On this day, the unit was last traded at Tk 3.90 paisa.
DSE topped on trade is Linde Bangladesh Limited 42 crore 32 lakh takas of company shares have been traded.
A total of 32 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 69 lakh 16 thousand 672 shares of the companies were traded. The financial value of which is 37 crore 43 lakh taka.
