Asian stocks slide as rate hike fears mount before nonfarm payrolls

Investing.com -- Most Asian stocks fell sharply on Friday, extending losses from the prior session as signs of a robust U.S. labor market drove up concerns over rising interest rates, with focus now turning to nonfarm payrolls data due later in the day.

Regional markets took a weak lead-in from Wall Street, with U.S. stocks logging steep overnight losses after data showed that private payrolls grew far more than expected in June.

The reading showed that the U.S. labor market remained resilient, and drummed up concerns that the Federal Reserve will act more aggressively in raising interest rates and curbing inflation. The dollar and U.S. bond yields rose on this notion, pressuring stock markets.

Thursday’s data also heralded a similar trend in nonfarm payrolls data due later on Friday.

Tech-heavy Asian indexes slide on Fed fears, weak Samsung results

Technology-heavy Asian markets were among the worst performers for the day, with Hong Kong’s Hang Seng index and South Korea’s KOSPI down 1% and 1.3%, respectively.

The KOSPI was also pressured by losses in Samsung Electronics Co Ltd (KS:005930), after the conglomerate flagged a sharp decline in its second-quarter earnings on weakness in global chip demand. Samsung’s shares sank 2.2%, with losses spilling into other chipmaking stocks.

Japan’s Advantest Corp (TYO:6857) shed 0.9%, while chipmaker SK Hynix Inc (KS:000660) dropped 1.4%.

Rising interest rates spur weakness in tech stocks by diminishing the appeal of future returns from the sector, as government debt begins to offer similar and safer returns.

Broader Asian markets also retreated amid fears that rising interest rates will limit capital inflows to the region. Japan’s Nikkei 225 fell 0.2%, while the TOPIX shed 0.4% as both indexes continued to retreat from 33-year highs.

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.6% and 0.4%, respectively, as a string of weak economic readings over the past week dampened the outlook for Asia’s largest economy. Concerns over China weighed on Australia’s ASX 200 index, which sank 1.4%.

Indian stocks at record highs, outperform for the week

Indian stocks were the best performers in Asia for the week, with the benchmark Nifty 50 and BSE Sensex 30 indexes hitting a series of consecutive record highs this week.

Both indexes were up about 1.6% each for the week, largely outperforming losses in their Asian peers amid increased optimism over the Indian economy.

This, coupled with a positive earnings outlook for blue-chip firms, also invited a barrage of foreign buying into local stocks over the past quarter. But analysts still warned that Indian stocks could see some consolidation in the third quarter.