The Asian markets, particularly Japan’s Nikkei 225, saw a significant plunge on Wednesday following the sell-off of U.S. tech stocks and weaker than expected U.S. economic data. The Nikkei 225 was down 3.19%, leading the losses in Asia, while the broader Topix also took a hit, dropping by 2.79%. Semiconductor-related stocks like Renesas Electronics, Tokyo Electron, and Advantest experienced substantial losses, with Renesas Electronics plunging 8% to become the largest loser on the index. Additionally, Softbank Group, the owner of chip designer Arm, fell over 5.9%, impacting other tech stocks in the market.
In South Korea, the Kospi lost 2.17% while the small-cap Kosdaq saw a nearly 3% decrease. Chip giants Samsung Electronics and SK Hynix, both suppliers to Nvidia, experienced declines of 2.62% and 6.36%, respectively. This downturn in the tech sector contributed to the overall negative sentiment in the South Korean market.
The Taiwan Weighted Index also took a hit, dropping by 3.49%. Heavyweights like Taiwan Semiconductor Manufacturing Company and Hon Hai Precision Industry, known as Foxconn, fell by 3.56% and 3.51%, respectively. Despite an initial loss of 5.29% at the start of trading, the index managed to recover slightly as the day progressed.
Australia’s S&P/ASX 200 lost almost 1.70%, primarily driven by a weakness in oil prices. The country’s second-quarter GDP growth was in line with expectations, growing by 1% year-on-year and 0.2% quarter-on-quarter. However, these figures were slightly lower than what economists had predicted.
Hong Kong’s Hang Seng index experienced a smaller loss compared to other markets in the region, slipping by 1.5%. Meanwhile, the mainland Chinese CSI 300 was down by 0.47%. Chinese chip stocks also saw some weakness, with Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor both recording losses despite being unrelated to Nvidia’s supply chain.
In the U.S., chipmaker Nvidia led the decline, losing over 9% in regular trading. This downturn also affected other chip manufacturers like Intel, AMD, and Marvell. The VanEck Semiconductor ETF, which tracks semiconductor stocks, experienced its worst day since March 2020, dropping by 7.5%. Additionally, the ISM manufacturing index for August fell short of expectations, further adding to the negative sentiment in the market.
Overall, the impact of weak U.S. economic data and the sell-off of tech stocks reverberated across Asian and U.S. markets, leading to significant losses in key indices. The volatility and uncertainty in the global economy highlight the interconnectedness of financial markets and the need for investors to stay informed and adapt to changing conditions.
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