Asian shares retreated Tuesday, with India’s Sensex dropping as much as 8% as investors who had bought shares after exit polls showed Prime Minister Narendra Modi winning a third term sold to lock in profits
Asian shares took a hit on Tuesday, with India’s Sensex plunging as much as 8% as investors who had bought shares following exit polls predicting Prime Minister Narendra Modi’s third term victory sold to secure profits.
Oil prices dipped while US futures saw a slight increase. By mid-afternoon, Mumbai’s Sensex was trading 7.1% lower at 71,020.45 as the vote count for the country’s six-week-long national election seemed to indicate a lower than expected seat count for Modi’s party, despite his National Democratic Alliance comfortably leading its closest rival.
Japan’s Nikkei 225 index dropped 0.2% to 38,837.46 and Seoul’s Kospi was down 0.8% at 2,660.69. Hong Kong’s Hang Seng was the exception, gaining 0.5% to 18,494.28, while the Shanghai Composite index edged 0.1% lower to 3,076.96. Australia’s S&P/ASX 200 shed 03% to 7,740.80. Taiwan’s Taiex lost 0.8%.
On Monday, US stocks drifted to a mixed finish. The S&P 500 edged 0.1% higher, to 5,283.40, even though the majority of stocks within the index fell. The Dow Jones Industrial Average dropped 0.3% to 38,571.03, and the Nasdaq composite rose 0.6% to 16,828.67.
Treasury yields also slid in the bond market after the report by the Institute for Supply Management showed US manufacturing shrank in May for the 18th time in 19 months. Manufacturing has been hit particularly hard by high interest rates meant to get high inflation under control.
That can also hit Asian economies that rely on exports. Analysts are concerned over the significance of a recent report, especially since the indicator has been on a downward trend for the better part of two years. “So, why such a distinct wave of US pessimism this time? Was it a manufactured excuse to take profits? Or is there a deeper cause for concern beneath the hood? ” pondered Tan Jing Yi from Mizuho Bank. “We suspect it is a bit of both.”
The yield on the 10-year Treasury note dipped to 4.39% from 4.50% late Friday. This week is packed with other major economic reports that could trigger further dramatic shifts in yields. On Tuesday, the US government will reveal the number of job openings employers posted at the end of April. Come Friday, it will provide the latest monthly insights into overall job growth and workers’ wages.
Stocks linked closely to the health of the economy suffered the most, dragging down the market. This includes the oil-and-gas sector, which saw prices plunge amid concerns over faltering fuel demand growth. Halliburton’s shares took a 5.3% hit, while Exxon Mobil’s stock declined by 2.4%. Both companies felt the impact as the price of a barrel of US oil fell by 3.5%.
Brent crude also dropped a similar percentage, despite efforts by Saudi Arabia and other oil-producing nations to stabilize its price over the weekend. However, some big tech stocks continued to soar, seemingly unaffected by economic fluctuations.
Nvidia saw its shares surge by another 4.9%, pushing its year-to-date gain to a staggering 132.2% following the unveiling of new products and services over the weekend. The tech giant has been raking in massive profits, silencing critics who claim that investors are overly optimistic about the potential of AI. Nvidia’s performance was a major driver behind the S&P 500’s upward movement.
Meanwhile, GameStop experienced a dramatic 21% increase, echoing the wild surge it underwent in early 2021 that introduced the term “meme stock” into everyday language. The spike came after a Reddit user linked to a key figure from the 2021 frenzy revealed they had acquired a stake of 5 million shares and additional options.
According to a Sunday night post, this investment is valued at $181.4 million. In other market activity early Tuesday, US benchmark crude oil dropped 85 cents to $73.37 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude also fell, losing 77 cents to settle at $77.59 per barrel.
Currency movements saw the US dollar inch up to 156.13 Japanese yen from 156.10 yen, while the euro dipped slightly to $1.0902 from $1.0904.
