“Market Alert: Asia Sinks as China Activity Weakens”


"Market Alert: Asia Sinks as China Activity Weakens"

Asian stock markets experienced a decline on Wednesday following the release of a survey indicating a weakening in Chinese industrial activity.

Shanghai, Tokyo, Hong Kong, and Sydney all saw negative movements, while oil prices showed mixed results. The absence of trading in U.S. markets on Tuesday due to a holiday also influenced market sentiment.

The survey conducted by Caixin, a leading Chinese business magazine, revealed a significant decline in the index of service industry activity in June.

This, coupled with a slowdown in factory activity, raised concerns about China’s economic recovery after the lifting of COVID-19 restrictions. Analysts expressed worries that without policy support, weakened growth expectations could become a self-fulfilling prophecy.

The Shanghai Composite Index dropped by 0.4%, while the Hang Seng in Hong Kong fell by 1.2%. Tokyo’s Nikkei 225 lost 0.4%, and the Kospi in Seoul declined by 0.4%. Sydney’s S&P-ASX 200 also experienced a 0.3% decrease.

The performance of China’s economy is particularly important as it is the largest trading partner for many Asian countries. The earlier rebound in retailing and factory activity slowed down more quickly than anticipated.

In terms of geopolitical tensions, traders remained cautious about U.S.-Chinese disputes over technology trade. Beijing’s recent announcement of export restrictions on gallium and germanium, key metals for semiconductors and solar panels, added to these concerns.

This development coincided with the visit of U.S. Treasury Secretary Janet Yellen, as part of efforts to improve strained relations between the two countries.

In energy markets, benchmark U.S. crude prices rose to $70.82 per barrel on the New York Mercantile Exchange, while Brent crude, the international oil trading reference, decreased to $75.73 per barrel in London.

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