Asian stocks experienced their most significant decline since 2022 on Friday, with Japanese markets leading regional losses. Concerns about a potential recession weighed heavily on the markets, following weak U.S. manufacturing and labor market data that revealed emerging weaknesses in the world's largest economy.
Increased tensions in the Middle East and disappointing earnings reports from Amazon and Intel further reduced demand for riskier assets. U.S. yields dropped, contributing to a rise in gold prices. Meanwhile, oil prices recovered some ground in Asian trading following a meeting of top OPEC+ ministers, who decided to maintain the current oil output policy.
Market participants keenly awaited U.S. payroll data, due later in the day, expected to provide further insights into the economic outlook and the Federal Reserve's rate strategy.
China's Shanghai Composite index dropped 0.92% to 2,905.34 amidst persisting concerns over the country's economic prospects. Hong Kong's Hang Seng index plummeted 2.08% to 16,945.51, affected by a global tech selloff driven by recession fears in the U.S.
Japanese markets suffered their worst losses since 2020 over apprehensions about rising interest rates. The Nikkei 225 tumbled 5.81% to 35,909.70, marking its second-largest point drop in history, as technology stocks experienced significant declines and a stronger yen posed challenges for exporters. The broader TOPIX index closed 6.14% lower at 2,537.60 amid widespread selling.
In South Korea, the KOSPI index fell 3.65% to 2,676.19, dragged down by tech and semiconductor stocks. Notably, Samsung Electronics fell 4.2%, and SK Hynix plunged 10.4%.
Australian markets saw sharp declines after reaching record highs in the two previous sessions. The benchmark S&P/ASX 200 dipped 2.11% to 7,943.20, with miners and financial firms leading the downturn. The broader All Ordinaries index declined 2.08% to 8,170.40. Meanwhile, in New Zealand, the benchmark S&P/NZX-50 index decreased 0.28% to 12,453.04.
U.S. stocks also tumbled overnight as weak economic data rekindled fears of a recession, overshadowing positive earnings news from Meta Platforms, the parent company of Facebook, and optimism about a potential near-term interest rate cut by the Federal Reserve. Early gains dissipated after data revealed a significant contraction in manufacturing activity in July and a rise in weekly jobless claims to an 11-month high.
The tech-heavy NASDAQ Composite fell 2.3%, the S&P 500 decreased by 1.4%, and the Dow Jones Industrial Average dipped 1.2%.
