Asia report: Markets fall as investors watch Ukraine, Hong Kong
Stock markets in Asia were lower at the close on Monday, as investors monitored developments in Ukraine as well as a fresh spike in Covid-19 infections in Hong Kong.
In Japan, the Nikkei 225 was down 2.23% at 27,079.59, as the yen strengthened 0.23% on the dollar to last trade at JPY 115.16.
It was a negative day for the benchmark’s major components, with automation specialist Fanuc down 1.15%, fashion firm Fast Retailing losing 3.09%, and technology conglomerate SoftBank Group 3.92% lower.
The broader Topix index was 1.63% weaker by the end of trading in Tokyo, closing at 1,930.65.
On the mainland, the Shanghai Composite was down 0.98% at 3,428.88, and the smaller, technology-heavy Shenzhen Composite slipped 0.43% to 2,253.13.
South Korea’s Kospi was 1.57% lower at 2,704.48, while the Hang Seng Index in Hong Kong was down 1.41% at 24,556.57.
The special administrative region was facing a fifth wave of infections, as authorities announced over the weekend that assistance in testing and quarantine management would be coming from mainland China.
Hong Kong’s chief executive said the wave had “dealt a heavy blow” to the city, adding that it was rapidly overwhelming its healthcare and administrative capacity.
The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics down 1.6%, while SK Hynix managed gains of 0.38%.
“With the situation between Russia and Ukraine reportedly worsening with the increasing possibility of an invasion, diplomatic solutions thus far have had little impact,” said Interactive Investor head of markets Richard Hunter on the global situation on Monday morning.
“In economic terms, while any such invasion would be most acutely felt in Europe, there would likely be wider implications such as the possibility of supply chain restrictions and a further boost to the oil price on lessened supply.
“The oil price has now risen by 23% in the year to date, exacerbating inflationary pressures.”
Hunter said the pressures were being “keenly felt globally”, with the latest reading of US inflation coming in above expectations, and becoming the highest annual increase in 40 years.
“This in turn has heightened concerns that the Federal Reserve will be more aggressive with its interest rate hiking programme in an attempt to stem the situation.
“The general tightening and rising interest rate environment has generally not been kind to stocks, with growth sensitive stocks such as big tech in the eye of the storm.
“At the same time, earnings misses and anything other than a strong outlook are being punished, even though for the most part the reporting season so far remains comfortably ahead of expectations.”
Oil prices were higher at the end of the Asian day, with Brent crude last up 0.34% at $94.76 per barrel, and West Texas Intermediate rising 0.34% to $93.42.
In Australia, the S&P/ASX 200 went against the regional trend, ending the day 0.37% higher at 7,243.90, while across the Tasman Sea, the S&P/NZX 50 was 1.84% weaker at 11,950.14.
Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.56% at AUD 1.4092, and the Kiwi retreating 0.68% at NZD 1.5157.