By Ambar Warrick
Investing.com-- Asian stock markets sank on Friday as Chinese cities introduced new COVID-19 curbs, while a broader rout in technology stocks spilled over into Asia after a slew of weak earnings from U.S. heavyweights.
China’s Shanghai Shenzhen CSI 300 index fell 1.7%, while the Shanghai Composite index shed 1.4% as several cities including Guangzhou and Wuhan introduced new measures to battle a rise in COVID cases.
The move brews fresh concerns over the Chinese economy, which is still reeling from a series of COVID lockdowns this year. The Chinese government recently reiterated its commitment to the strict zero-COVID policy, keeping the country’s economic outlook uncertain.
Uncertainty over the country’s political climate also weighed on Chinese stocks this week, putting them on course for a weekly loss.
Hong Kong’s Hang Seng index was the worst performer among its peers this week, down over 3% on Friday to a near 14-year low as local stocks were the worst hit by a rout in U.S. technology majors.
The index was also set to lose nearly 8% this week, as technology majors including Alibaba Group (HK:9988), Baidu Inc (HK:9888), Tencent Holdings Ltd (HK:0700), and JD.com Inc (HK:9618) were hit hard by their exposure to U.S. markets.
Wall Street indexes slumped overnight, with the tech-heavy NASDAQ Composite falling the most on weak earnings and guidance from majors including Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOG), and Amazon.com Inc (NASDAQ:AMZN).
Other tech-heavy indexes in Asia also slumped. The Taiwan Weighted index dropped 1.5%, while South Korea’s KOSPI fell 0.8%.
But the KOSPI was among the best performers this week, rising nearly 3% as dismal third-quarter GDP data spurred expectations that the Bank of Korea will soften its pace of interest rate hikes.
Bucking the trend, India's Nifty 50 index rose 0.2%, supported by gains in major energy and consumer stocks. India's economic growth prospects, which are forecast to be far higher than most major economies this year, have largely buoyed Indian stocks this month. The Nifty 50 was also set to rise this week.
Focus now turns to a U.S. Federal Reserve meeting next week, where the bank is almost unanimously expected to hike interest rates by 75 basis points.
But markets are pricing in the possibility that the Fed will lower its pace of rate hikes from December, as data on Thursday showed the U.S. economy was less impacted by rising inflation than initially thought.
Rising U.S. interest rates weighed heavily on Asian stocks this year by lowering liquidity, and as rising yields made equities appear less attractive.