ASIA-PACIFIC
Japan's Nikkei falls more than 2% as Asia stocks slip; China's April trade data come in above expectations
SINGAPORE — Shares in Asia-Pacific largely fell on Monday as investors watched for market reaction to Chinese trade data that came in better-than-expected.
In Japan, the Nikkei 225 fell 2.53% to close at 26,319.34, leading losses among the region’s major markets as shares of Fast Retailing dropped 6.26%. The Topix index shed 1.96% to 1,878.39.
Mainland Chinese stocks closed mixed, with the Shanghai Composite rising fractionally to 3,004.14 while the Shenzhen Component slipped 0.409% to about 10,765.63.
China’s dollar-denominated exports grew 3.9% year-on-year in April, customs data showed Monday. They were above expectations for a 3.2% rise by analysts in a Reuters poll.
China’s dollar-denominated imports were unchanged in April compared to a year ago, better than an expected 3% drop, according to Reuters.
The data came as mainland China continued to battle its worst Covid outbreak since early 2020. Chinese President Xi Jinping on Thursday emphasized that the country should stick to its “dynamic zero-Covid” policy.
“It is unclear how quickly China will pivot towards living with COVID,” Tapas Strickland, an economist at National Australia Bank, wrote in a Monday note. “As for data, it is expected to take a backseat given lockdowns/enhanced restrictions in many parts of the country.”
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Elsewhere, South Korea’s Kospi slipped 1.27% to close at 2,610.81 while the S&P/ASX 200 in Australia declined 1.18% on the day to 7,120.70.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.3%.
“We’ve cautioned about getting too bearish,” Steve Brice, chief investment officer at Standard Chartered Wealth Management, told CNBC’s “Street Signs Asia” on Monday.
“If you look at indicators … from a market perspective, that bearishness is coming through as well, and that’s usually a buying opportunity,” said Brice. “I know there’s a lot of challenges out there … in terms of the inflation outlook, but you know, the markets are already pricing in very, very sharp monetary policy tightening. At some point we will find a bottom.”
Markets in Hong Kong were closed on Monday for a holiday.
| TICKER | COMPANY | NAME | PRICE | CHANGE | %CHANGE |
|---|---|---|---|---|---|
| Nikkei 225 Index | *NIKKEI | 26319.34 | -684.22 | -2.53 | |
| Hang Seng Index | *HSI | 20001.96 | -791.44 | -3.81 | |
| S&P/ASX 200 | *ASX 200 | 7120.7 | -84.9 | -1.18 | |
| Shanghai | *SHANGHAI | 3004.14 | 2.58 | 0.09 | |
| KOSPI Index | *KOSPI | 2610.81 | -33.7 | -1.27 | |
| CNBC 100 ASIA IDX | *CNBC 100 | 8243.6 | -120.09 | -1.44 |
Currencies and oil
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 103.991 following a recent jump from levels below 103.2.
The Japanese yen traded at 131.09 per dollar, weaker as compared with levels below 129 seen against the greenback last week. The Australian dollar changed hands at $0.7007 after last week’s drop from above $0.721.
Oil prices were lower in the afternoon of Asia trading hours, with international benchmark Brent crude futures declining 0.3% to $112.05 per barrel. U.S. crude futures dipped 0.46% to $109.27 per barrel.
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EUROPE
European markets close down 2.8% as travel, tech stocks lead losses; oil prices fall 5%
LONDON — European stocks on Monday fell to two-month lows as global investors fled risk assets en masse due to fears over inflation.
The pan-European Stoxx 600 provisionally ended down 2.8%, hitting its lowest level since Mar. 8. Travel and tech shares led the losses, down 5.8% and 4.8% respectively, as all sectors and major bourses traded firmly in negative territory.
The risk aversion for European markets comes after regional stocks retreated at the end of the last trading week on the back of a rout in U.S. markets, with Wall Street posting its worst day since 2020 last Thursday.
U.S. stocks fell sharply Monday, pushing the S&P 500 to a fresh 52-week low, as traders struggled to find their footing after a dramatic week of trading stateside. Shares in Asia-Pacific also retreated on Monday.
"Even the volatility of volatility is on the rise. The Vix index, which tracks expected volatility of the S&P 500, dropped a fifth in the first half of the week before leaping 25 per cent on Thursday. It's now more than double the five-year average."
Stuart Kirk
Global Head of Research and Responsible Investments, HSBC
Global markets have been volatile in recent weeks as uncertainty reigns over the outlook for monetary policy, inflation and economic growth.
"Even the volatility of volatility is on the rise. The Vix index, which tracks expected volatility of the S&P 500, dropped a fifth in the first half of the week before leaping 25 per cent on Thursday. It's now more than double the five-year average," said Stuart Kirk, HSBC global head of research and responsible investments.
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Investors are also keeping an eye on the war in Ukraine as dozens are feared dead after a school in the Luhansk region in eastern Ukraine was hit by Russian shelling. Luhansk is one of the two regions that make up the Donbas, where Russian troops are now largely concentrating their attacks.
Russia was also under scrutiny on Monday, as it held its "Victory Day" — a holiday commemorating the Soviet Union's defeat of Nazi Germany in World War II.
In his speech, President Vladimir Putin attempted to justify his unprecedented invasion of Ukraine by claiming without evidence that the West was "preparing for the invasion of our land, including Crimea," according to a Reuters translation.
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U.S. first lady Jill Biden made a surprise visit to Ukraine on Sunday. The U.S. and Group of Seven countries announced that they would increase short-term financial support for Ukraine as the war with Russia nears the three-month mark.
Also weighing on investor sentiment are continued coronavirus lockdowns in China. In oil markets, international benchmark Brent crude futures sank 5.2% to $106.52 a barrel while U.S. light crude futures fell 5.6% to $103.61. China is the world's largest oil importer.
In terms of individual share price movement in Europe, German food delivery company Delivery Hero slumped 13% to the bottom of the Stoxx 600.
British advertising agency S4 Capital plunged 11% after being forced to cut its earnings outlook after an auditing issue forced a delay to the publication of its full-year results.
— CNBC's Jesse Pound contributed to this market report.
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US
Dow falls more than 600 points, S&P 500 tumbles below 4,000 to the lowest level in a year
Stocks fell sharply Monday, pushing the S&P 500 to breach the 4,000 level for the first time in more than a year as the market sell-off continued.
The Dow Jones Industrial Average dropped 610 points, or 1.9%. The S&P 500 fell 3.1%, while the Nasdaq Composite lost 4.2%.
The S&P 500 traded as low as 3,988.23 on the day, dipping below the 4,000 mark for the first time since April 2021 and pulling back 17% from a 52-week high as traders struggled to bounce back from last week's big market swings. All sectors except for consumer staples dipped into the red.
Amid the losses, the benchmark 10-year Treasury note yield hit its highest level since late 2018, trading well above 3%.
"This is significant repricing, this is significant dislocation and this is all being spurred and driven by Federal Reserve policy," said Jeff Kilburg of Sanctuary Wealth. "The only way I see us finding the bottom in equities short-term, the only way I see markets healing is if the Fed has the ability with the tools in their toolbox to calm down interest rates. The 10-year note needs to go back under 3%."
Rising rates continued to crush technology names such as Meta Platforms and Alphabet, which fell more than 4.3% and 1.7%, respectively. Amazon, Apple and Netflix all fell nearly 3%, while Tesla and Nvidia dipped more than 6%.
The combination of high rates and a potential recession as inflation surges also hit other areas of the market. Consumer stocks like Nike suffered along with industrials such as Caterpillar and Deere. Bank stocks also came under pressure with Bank of America falling more than 3%.
Boeing marked the biggest loser in the Dow, plunging more than 7% followed by energy bellwether Chevron which slipped 5.5% as U.S. oil futures continued to slide. Amgen, Walmart, Home Depot and 3M remained bright spots in the market, posting gains despite the broader sell-off.
"We expect markets to remain volatile, with risks skewed to the downside as stagflation risks continue to increase," wrote Barclays' Maneesh Deshpande. "While we cannot discount sharp bear market rallies, we think upside is limited."
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Chart analysts are also seeing signs of a prolonged market downturn emerge.
"Our thinking is that stocks are likely to continue lower because we have not yet seen enough technical evidence to suggest a bottom process has started," wrote JC O'Hara of MKM Partners. "Technical indicators are not oversold enough. The volume profile has shown little if any signs of real capitulation."
On the earnings front, Palantir cratered 21% on weak revenue guidance and BioNTech gained 5.8% following a strong quarter. First-quarter earnings season is slowing down, but there are several notable reports including Walt Disney and Occidental Petroleum slated for later in the week.
In other corporate news, Rivian shares plunged nearly 15% after CNBC's David Faber reported on Saturday that Ford is looking to sell 8 million shares in the electric vehicle maker.
Monday's moves came as Wall Street finished an erratic week of eye-popping day-to-day swings as investors weighed the prospects of rising interest rates against the potential of slower economic growth.
The moves followed remarks from Federal Reserve Chair Jerome Powell, indicating the central bank was not considering a 75-basis-point rate hike at upcoming meetings. Stocks rallied and rates slipped following the comments before reversing course on Thursday.
