Most Asian stock markets went down on Monday because people were worried that Sino-U.S. relations would get worse after the U.S. shot down a suspected Chinese spy balloon. Markets also changed their view of U.S. monetary policy after strong payroll data.
The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes both went down by 1.7% and 1%, making them some of the worst performers of the day. Beijing chastised the United States for shooting down a suspected Chinese spy balloon off the coast of South Carolina over the weekend, raising concerns about bilateral relations.China said the balloon drifted into U.S. airspace by accident and was used to study the weather.
The Hang Seng index in Hong Kong also fell 2.2%, and major technology stocks saw big drops. Other tech-heavy indexes fell on Monday, including South Korea’s KOSPI and Taiwan’s Weighted Index, which both fell about 1%.
After news came out on Friday that U.S. nonfarm payrolls jumped by more than expected in January, investors became much less optimistic about Asian stocks. Even though the economy is slowing down, the reading showed that the U.S. job market is still strong. This gives the Federal Reserve more room to keep raising interest rates.
Markets were also worried that strong job growth in the U.S. could keep inflation there for a long time. Asian markets were hurt by rising interest rates until 2022, when the amount of foreign money coming into the area slowed down and local central banks kept up with the Fed. But a recovery in China’s economy and a stop in the Fed’s rate hikes should help regional stocks in the long run.
Asian markets were doing well before Friday’s reading, which made some people take profits on Monday.
Both the Nifty 50 and the BSE Sensex 30 went down by 0.4% as the fall of Indian stocks went on. Adani Group’s companies lost a lot more money, and its flagship company, Adani Enterprises Ltd. (NS:ADEL), lost more than 50% of its value after a short seller raised concerns about how much it was worth. On Monday, the stock fell by more than 7%.
The only exception for the day was Japanese stocks. The Nikkei 225 index went up 0.7% after a report said that Bank of Japan Deputy Governor Masayoshi Amamiya would be the next person to lead the central bank.
Amamiya is seen as a supporter of the BOJ’s ultra-loose monetary policy, which is likely to help Japanese stocks by keeping liquidity loose for longer.
The ASX 200 index dropped 0.2%. But shares of gold miner Newcrest Mining Ltd. (ASX:NCM) rose almost 11% after global rival Newmont Corp. made a $17 billion offer to buy it (NYSE:NEM).