Most Asian stocks fell on Wednesday, weighed down by renewed losses in the technology sector as major corporate earnings in the United States fell overnight, while sentiment toward China also showed little sign of improvement.
Regional stocks received weak support from Wall Street, especially as U.S. stock index futures fell following disappointing earnings from tech giants Tesla (NASDAQ:) and Alphabet (NASDAQ:).
This led to a prolonged sell-off in technology stocks, which came as the sector suffered sharp losses over the past week. Profit-taking and a shift to more economically sensitive sectors have weakened global technology valuations over the past year.
Asian tech stocks fall after weak U.S. earnings
Japanese stocks fell 0.5%, while South Korean shares fell 0.1%, with technology stocks weighing on the losses.
Hong Kong’s index was among the worst performers of the day, losing 0.6% as major electric car stocks fell along with Tesla.
BYD (SZ:) Co Ltd (HK:), Lee Otto Hong Kong Company: x ping General Motors (HK:) shares fell between 2% and 4.3%, tracking a nearly 8% drop in Tesla after the company’s second-quarter earnings missed expectations.
Tesla has struggled to cope with declining sales and rising expenses as it shifts more resources toward artificial intelligence and self-driving technology.
Alphabet Inc.’s earnings also sent a weak signal to Asian markets. While the internet giant beat earnings expectations, slower growth in advertising revenue and increased spending on artificial intelligence heralded a similar trend for regional tech giants due to report in the coming weeks. Alphabet shares fell 2% in after-market trading.
Chinese stocks fall to two-week low on economic, political tensions
Chinese stock indexes fell 0.8% and 0.6% respectively, hitting their lowest levels in more than two weeks.
Chinese markets have been on a downward spiral in recent sessions as sentiment towards the country has soured following disappointing economic readings, particularly data showing slower-than-expected growth in the second quarter.
This was coupled with disappointing interest rate cuts by the People’s Bank of China, while the third session of the Chinese Communist Party yielded no indications of further stimulus measures.
Uncertainty over the US presidential race also weighed on sentiment towards China, as investors speculated about what a change in US administration might mean for Washington’s stance towards the country.
Broader Asian markets moved in a range from flat to down. Australian shares fell slightly as PMI data showed activity in the country likely slowed in July.
Japan’s stock index fell 0.4%, with losses capped by some signs of improvement in the Japanese economy. While the purchasing managers’ index data showed a contraction in activity, it rebounded sharply to expansion in July, boosting overall business activity.
India’s index futures fell 0.1%, with the index facing some weakness as investors balk at the capital gains tax hikes envisaged in the government’s 2024 budget.
But overall, the budget seemed more geared towards reducing India’s fiscal deficit and controlling government spending.