Asian Markets Tumble with South Korea, Japan and Hong Kong Down by 3%

On Monday, Asian markets tumbled, as most of the indexes in the region recorded sharp declines and the USD/JPY currency pair was holding at the 135 level.

Major Markets Record Declines

The Hang Seng index in Hong Kong fell by 3.39% to reach 21,067.58. There was a 7.98% fall in Alibaba’s shares, while Tencentplunged by 4.89%. As far as the Hang Seng Tech index is concerned, it recorded a 4.72% fall, which brought it to 4,598.65.

The Kospi index in South Korea slid 3.52%, which brought it to a low of 2,504.21. Tech shares were leading the decline, as Samsung Electronics fell by 2.66%, while a 4.49% drop was recorded in Kakao. The Nikkei 225 in Japan fell by 3.01% to end the day at 26,987.44. There was a 6.85% drop recorded in shares of SoftBank Group.

A 2.16% decline in the Topix index was also seen, which brought it to a close of 1,901.06. The Taiex index fell in Taiwan by 2.36% and ended the day at 16,070.98. There was also a 2.64% drop in TSMC’s shares. Mainland China’s Shanghai Composite fell by 0.89% and ended the day at 3,255.55. Meanwhile, there was a 0.298% decline in the Shenzhen Component, as it reached 11,999.31.

Investor sentiment in Asia Pacific may have been down on Monday because of worries about the COVID-19 situation in China. Just days after Beijing had loosened the curbs, it once more delayed school openings, suspended sporting events and imposed other measures.

The Yen Weakens Against the Dollar

On Monday, the Asian losses came as the Japanese currency declined against the US dollar to reach 135.17 until it recovered some of these losses. The yen was last changing hands against the greenback at a value of 134.42, but remained weaker as opposed to the 132 level that it had managed to reach against the currency last week.

In Asia trading hours, there was a rise in US Treasury yields in afternoon trading. The increase in the 10-year Treasury bond yields saw them rise to 3.227%, whereas the 2-year ones reached 3.2056%. The two bonds were closer to an inversion, which is considered a signal for an economic recession.

As far as bond yields for the Japanese government are concerned, they were treading negative territory. The Ministry of Finance in Japan and its central bank have recently commented on the sharp decline in the yen and have hinted at a possible interference if the situation continues.

Australian markets remained close for the day because of a holiday. On Wednesday, the US Federal Reserve is scheduled for a meeting and a great deal of Chinese economic data is also scheduled for release. This includes retail sales and industrial production for May. As for the Fed’s meeting, this will dictate the next interest rate hike of the central bank. It is now in a bind because inflation numbers are significantly hotter than what had been predicted and this could mean a bigger rate hike.

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