Asia stocks tumble as hawkish Fed rattles tech; BOJ in focus

Asian stocks fell sharply on Thursday with technology shares leading losses after the Federal Reserve projected a slower pace of interest rate cuts in 2025, presenting a tougher environment for risk-driven markets. 

Focus was now on the conclusion of a Bank of Japan meeting later in the day, with analysts split over whether the bank will hike or hold rates. 

Regional stocks tracked an overnight tumble on Wall Street after the Fed cut rates by 25 basis points as expected, but flagged a substantially slower pace of rate cuts in the coming year.

Tech stocks bore the brunt of losses, as investors locked-in profits from a recent run-up in the sector. The NASDAQ Composite slid 3.6% in its worst day in nearly five months.

U.S. stock index futures were flat in Asian trade.  Japanese stocks weak ahead of BOJ

Japan’s Nikkei 225 fell 1.2%, while the broader TOPIX lost 0.7% on weakness in heavyweight technology stocks.

Investors were cautious towards Japanese markets in anticipation of the BOJ , with analysts split over the central bank’s next move. 

A Reuters report showed policymakers were more geared towards a hold in December, but were actively considering rate hikes amid some resilience in Japan’s economy and a recent uptick in inflation. 

The BOJ had raised rates twice earlier in 2024, marking a historic shift away from nearly a decade of ultra-loose monetary policy. Governor Kazuo Ueda has also signaled that the central bank will raise rates further.  Asian tech slumps on Fed jitters, Micron weakness 

Tech-heavy bourses were by far the worst performers in Asia, tracking steep overnight declines in their U.S. peers.

South Korea’s KOSPI index slid 1.7%, with sentiment towards the country remaining fragile amid increased political turmoil after President Yoon Suk Yeol was impeached over an unsuccessful attempt to impose military rule. 

Memory chip making giants SK Hynix Inc (KS:000660 ) and Samsung Electronics Co Ltd (KS:005930 ) were the biggest weights on the KOSPI, losing 3.8% and 2.7%, respectively. The two tracked a 16% slump in U.S. peer Micron Technology Inc (NASDAQ:MU ), after the chipmaker’s quarterly revenue guidance largely missed expectations. The miss raised questions over just how resilient artificial intelligence demand remained, especially amid growing global economic headwinds.

Losses in tech and chipmaking stocks pulled Hong Kong’s Hang Seng index down 1%. 

Chinese markets also retreated, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes losing 0.4% and 0.7%, respectively. But bigger losses in Chinese stocks were mitigated by optimism over Beijing’s plans for more fiscal spending in 2025.

Australia’s ASX 200 fell 1.8%, while Singapore’s Straits Times Index lost 0.2%. 

Futures for India’s Nifty 50 index pointed to a mildly positive open, with the index set for some relief after clocking three days of steep losses. 

Source: Investing.com