Asian markets experienced notable declines on Wednesday, driven by disappointing U.S. manufacturing data that led to significant sell-offs in chip-related stocks.
Gold prices remained subdued, trading below $2500, as a stronger U.S. dollar weighed on the market. Investors are now focusing on upcoming U.S. economic reports, including Friday's payroll data, for further insights into the economic and interest rate outlook.
Oil prices extended their sharp losses from overnight, approaching a nine-month low. This decline is attributed to renewed concerns about a potential slowdown in demand from China and the possibility of increased supply from major producers.
In China, the Shanghai Composite Index fell by 0.67% to 2,784.28, following a private survey that indicated a slowdown in the growth of the country's services sector activity in August, despite the peak summer travel season.
Hong Kong's Hang Seng Index dropped 1.10% to 17,457.34, reflecting worries about the economic outlook in both the U.S. and China.
In Japan, the markets saw their largest decline in a month, as fears about slowed growth reduced investors' risk appetite. The Nikkei average plummeted by 4.24% to 37,047.61, its lowest close since August 15, and marking the largest decline since August 5. The broader Topix Index fell 3.65% to 2,633.49. Leading the losses were chip-related stocks, with Advantest, Screen Holdings, and Tokyo Electron suffering drops of 8-9%.
However, Fuji Soft saw a surge of 7.4% after U.S. buyout fund Bain Capital indicated its intention to make a counteroffer for the software developer, surpassing the existing bid from KKR.
In South Korea, the Kospi Index tumbled 3.15% to 2,580.80, influenced by the overnight decline in Wall Street tech stocks. Key players, such as Samsung Electronics and SK Hynix, fell by 3.5% and 8%, respectively.
Australia's markets also experienced sharp declines, with energy, mining, and IT stocks facing the largest drops. The benchmark S&P/ASX 200 Index decreased by 1.88% to 7,950.50, following the release of GDP data for the second quarter. The broader All Ordinaries Index closed 1.99% lower at 8,157.
In contrast, New Zealand's benchmark S&P/NZX-50 Index edged up by 0.15% to 12,553.35.
Overnight in the U.S., stocks suffered substantial declines, with major averages posting their worst performance since August 5. Weak manufacturing data raised fears that the U.S. economy could be heading towards a recession. The Nasdaq Composite, heavily weighted with technology stocks, plummeted 3.3%, driven by significant drops in Nvidia and other chip stocks. The S&P 500 fell by 2.1%, and the Dow dipped by 1.5%, as two indicators of manufacturing activity continued to show sluggish performance in the sector.
