Asian shares extend early-year losses on profit-taking

Investing.com – Most Asian stocks fell on Thursday, extending losses after a weak start to the year, as persistent doubts about the timing and scale of the Federal Reserve’s interest rate cuts led investors to lock in more profits.

Regional markets were weak, led by Wall Street, with U.S. stock benchmarks falling for a second straight session on Wednesday as sentiment remained jittery. U.S. stocks also saw significant profit-taking after their sharp gains in December.

In Asia, Japan’s index was the worst performer, falling 1.2% in catch-up trading after an extended New Year holiday. Sentiment toward Japan has also been roiled by a devastating earthquake earlier this week that killed dozens of people and caused widespread damage in central Japan.

(PMI) data showed that Japan’s manufacturing activity remained in contraction in December.

Falling heavyweight technology stocks also weighed on the Nikkei, mirroring a trend across most stock markets.

Asian tech stocks fall further as uncertainty over rate cut persists

Tech-heavy indexes continued to take a beating as markets second-guessed when the Federal Reserve would begin cutting interest rates this year. South Korea’s index fell 0.9% and Hong Kong’s index fell 0.4%.

Central bankers have made progress in tackling inflation over the past year. But the minutes also gave no clues as to when the central bank might begin cutting interest rates as hinted at during the meeting.

The minutes showed concerns about a soft landing for the U.S. economy and whether monetary policy is too strict.

Although the Fed is expected to cut interest rates by at least 75 basis points in 2024, markets remain uncertain about the timing of potential rate cuts. That spurred massive profit-taking in technology stocks, which surged in December on the prospect of rate cuts this year.

Markets are also cautious ahead of Friday’s data, which is expected to influence monetary policy.

Asian stock markets extended recent losses, with Australian shares falling 0.3%, further down from recent 2-1/2-year highs. PMI data showed Australia’s economy remained in contraction in December.

India index futures opened on a weak note, with more profit-taking on the cards after the index hit a series of all-time highs in December. PMI data on Wednesday showed growth in December was weaker than expected.

Chinese stocks continue to lag peers as aggressive private investigations into the services sector do little to inspire confidence in the country. The blue-chip index fell 1.1%, still near a five-year low, while the index fell 0.7%.

Data show that China’s service industry grew faster than expected in December.

However, data still show that China’s economic recovery is still under pressure, especially manufacturing activities, which account for a large proportion of the economy, still lagged behind in December.

Official data released earlier this week also painted a much weaker picture of the economy than the Caixin data.

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