Hang Seng Index Plummeting 3%
Concerns about a potential slowdown in the global economic recovery have resurfaced, leading major Asian stock markets to fall simultaneously on the 6th.
As of 2 p.m. Korea time, the Hong Kong Hang Seng Index plunged 570.79 points (2.99%) to 18,539.59. At the same time, Japan's Nikkei 225 Index dropped 556.85 points (1.67%) to 32,781.85, and the TOPIX Index fell 28.12 points (1.22%) to 2,277.91.
China's stock market also showed weakness amid renewed concerns that the economic rebound will be slow. The Shanghai Composite Index declined 18.69 points (0.58%) to 3,204.26, while the Shenzhen Composite Index fell 41.48 points (0.38%) to 10,987.82.
The simultaneous decline in major Asian stock markets is interpreted as a risk-asset avoidance phenomenon occurring across global markets. The New York Stock Exchange closed lower the previous day amid relatively light trading following the Independence Day holiday and reaffirmation of the Federal Reserve's (Fed) hawkish stance.
At the June Federal Open Market Committee (FOMC) regular meeting, the Fed kept the benchmark interest rate steady at 5.00-5.25%, but the minutes released that afternoon confirmed messages indicating further rate hikes within the year, dampening investor sentiment.
Market expectations are emerging that the Fed will resume rate hikes this month. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds (FF) futures market currently reflects nearly an 89% probability of a July baby step rate increase.
China's weak economic indicators also negatively impacted Asian stock markets. The Caixin Services Purchasing Managers' Index (PMI) for June, released the previous day by Chinese economic media Caixin, recorded 53.9?the lowest in five months?adding downward pressure on the stock market. Earlier, the official manufacturing PMI released by China's National Bureau of Statistics stood at 49 last month, remaining below the baseline for three consecutive months.
U.S. investment bank Goldman Sachs pointed out, "Chinese investors do not expect policymakers to announce aggressive stimulus measures or economic plans at the meeting scheduled for the end of this month."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
