Hang Seng Index: Tech Stocks Drop as NVIDIA Earnings Disappoint

US Equity Markets Dip

On Wednesday, August 28, the US equity market had a negative mid-week session as investors awaited NVIDIA’s (NVDA) earnings report.

The Nasdaq Composite Index slid by 1.12%. Super Micro Computer (SMCI)’s share price tumbled 19.02% on news of a delay to its annual report filing, contributing to the losses. The S&P 500 and the Dow declined by 0.39% and 0.60%, respectively.

After-hours, NVIDIA released its earnings report, which beat Wall Street expectations but fell short of top estimates. NVIDIA’s share price slid by 6.89% during after-hours trading. The overnight US equity market losses and the reaction to NVIDIA’s earnings set the tone for the Thursday Asian session.

China Growth Concerns Impact Mainland Markets

On Wednesday, UBS reportedly downgraded China’s 2024 GDP growth forecast from 4.9% to 4.6%. The downgrade followed a series of disappointing economic indicators, including an unexpected contraction across China’s manufacturing sector and weaker industrial production trends.

In Q2 2024, the Chinese economy grew by 4.7%, down from 5.3% in Q1 2024. July’s Manufacturing PMI and industrial production numbers suggest a possible further slowdown in early Q3 2024.

Beijing has remained silent on fiscal policy support measures, which has impacted buyer demand for Mainland China stocks.

Hang Seng and Mainland China Equities Trend Lower

The Hang Seng Index was down 0.83% on Thursday morning. Tech stocks contributed to the losses as investors reacted to NVIDIA’s after-hours sell-off.

The Hang Seng Tech (HSTECH) extended its losses from Wednesday, falling by 1.05%.

Notable movers included Baidu (9888), which slid by 2.01%, and Alibaba (9988), which declined by 1.96%. Tencent (0700) remained flat. Beyond the tech sector, Li Auto (2015) tumbled 10.30% after missing profit forecasts.

The Mainland equity markets extended their losses from Wednesday, with the CSI 300 and the Shanghai Composite Index falling by 0.09% and 0.42%, respectively.

Nikkei Index Declines as BoJ Affirms Hawkish Stance

The Nikkei Index fell by 0.39% on Thursday morning. Market reaction to NVIDIA overshadowed USD/JPY gains, dragging the Index into negative territory.

Tokyo Electron Ltd. (8035) and Softbank Group Corp. (9984) declined by 1.11% and 2.31%, respectively.

Hawkish comments from Bank of Japan Deputy Governor Ryozo Himino also resonated, impacting Nikkei-listed export stocks. Nissan Corp. (7201) declined by 1.26%. On Wednesday, Deputy Governor Himino supported further rate hikes if inflation and the economy aligned with forecasts.

ASX 200 Falls on Commodity Prices and Earnings

The ASX 200 Index fell by 0.42% on Thursday morning. Oil, gold, and mining stocks contributed to the losses.

Gold-related stock Northern Star Resources Ltd. (NST) declined by 0.36% after gold prices dropped by 0.78% on Wednesday. Oil-related stock Woodside Energy Group (WDS) fell by 0.98% as oil prices declined on Wednesday due to easing fears of supply disruptions from Libya.

Mining giants BHP Group Ltd. (BHP) and Rio Tinto (RIO) were down by 1.01% and 0.60%, respectively. Iron ore prices trended lower on Wednesday.

Retailers were also under the spotlight. Online luxury fashion retailer Cettire Limited tumbled 17.67% as the company reported a slump in profits, while Wesfarmers was down 3.83% following sales figures from its Bunnings division.

Investors should remain alert, with central bank commentary pivotal as the US Personal Income and Outlays Report looms. Closely monitor the news wires, real-time data, and expert commentary to manage trading strategies accordingly. Stay informed with our latest news and analysis to manage positions across the Asian equity markets.