Asian shares decline, with tech trading lower after Wall Street losses

FAN Editor

Asian shares declined on Thursday, taking cues from losses on Wall Street after Chinese internet giant Tencent reported a fall in quarterly profit — a disappointing result that weighed on the tech space stateside.

The Nikkei 225 fell by 1.38 percent in early hours trade, with all sectors in Tokyo recording losses, as the oil and coal producers saw the largest decline of 5.3 percent.

South Korea’s Kospi declined by 1.40 percent, as its tech sector largely took a hit after their counterparts on Wall Street came under pressure overnight. SK Hynix was among the major names affected, sliding 3.82 percent while Samsung Electronics saw a fall of 2.55 percent.

Elsewhere, the ASX 200 saw a relatively smaller drop of 0.68 percent, with the energy and material subindexes leading the way following a fall in commodity prices overnight. Major mining players such as Rio Tinto and BHP all seeing declines around 3 percent. In the energy space, Woodside Petroleum saw a slight dip of 0.61 percent while other names sustained larger declines, most notably Origin Energy which slid 6.49 percent.

Losses in Asia came on the back of declines in markets stateside: The Dow Jones Industrial Average lost 137.51 points and closed 0.54 percent lower at 25,162.41. The Nasdaq Composite dropped 1.23 percent and the S&P 500 finished the session lower by 0.76 percent.

Tech shares in the U.S. were pressured following disappointing quarterly earnings from Tencent. The sector, which has the largest weighting in the S&P 500, fell more than 1 percent following the disappointing announcement from the Chinese tech giant, with companies like Facebook and Alibaba all recording losses.

Tencent on Wednesday announced profit for the quarter ending in June dipped 2 percent to 17.87 billion yuan ($2.59 billion) from one year ago, coming in below the Thomson Reuters forecast of 19.67 billion yuan. That was also the first decline in profit for the company in almost 13 years.

Tencent shares had stumbled in the last session, dropping 3.61 percent in Hong Kong as its gaming business came under greater regulatory scrutiny. The tech giant’s U.S.-listed shares dropped 6.67 percent on Wednesday.

Emerging markets performed poorly overnight, with the iShares MSCI Emerging Markets ETF (EEM) falling more than 2.9 percent and moving into bear-market territory, referring to a drop of more than 20 percent from recent highs.

Concerns related to Turkey’s currency crisis were also in the background after the country’s currency dropped to a record low earlier this week. The lira held on to overnight gains to trade at 5.9517 to the dollar at 8:05 a.m. HK/SIN, strengthening after Turkey cut offshore banks’ access to its currency.

The dollar index, which tracks the dollar against a basket of currencies, was mostly steady overnight. The index was last at 96.729 after touching a 13-month high of 96.984 in the last session.

Meanwhile, the offshore yuan traded at 6.9448 at 8:03 a.m. HK/SIN after earlier weakening to trade at the 6.95 handle.

In Southeast Asia, Indonesia’s central bank on Wednesday raised interest rates by 25 basis points to 5.5 percent. Bank Indonesia has cumulatively increased rates by 125 bps so far this year.

Here’s the economic calendar for Thursday (all times in HK/SIN):

  • 9:30 a.m.: Australia July employment

— CNBC’s Fred Imbert and David Reid contributed to this report.

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