Australian, Japanese Shares Follow Wall Street Lower with Most Asian Markets Closed for May Day Holiday

The major stock indexes in Australia and Japan declined sharply on Friday, with most of their major Asian counterparts closed for May Day holidays.

Weakness in the banking sector was primarily behind the selling pressure in Australia’s S&P/ASX 200 index. Miners also contributed to the weakness. Major banks such as Commonwealth Bank of Australia and Australia and New Zealand Banking Group (ANZ) saw their shares plunge more than 4.5% each. Additionally, shares of major minor BHP dropped 7.76%.

The loss in Japan was spread across the board with shares of Tokyo Electron falling 5.51%. Japan’s Topix Index also fell 2.24% to end its trading day at 1431.26.

Australian Share Market Tumbles Five-Percent

The Australian share market wiped out a week’s worth of gains on Friday, ending sharply lower following a broad-based sell-off on Wall Street overnight.

The benchmark S&P/ASX 200 Index settled at 5245.90, down 276.50 points or 5.01% on Friday.

“Some of this is a reversal of recent gains but also the rot seems to be settling in that bank dividends are no longer the yield trade retail money had come to rely on,” said Karen Jorritsma, the head of equities at RBC Capital Markets.

On Thursday, ANZ deferred its decision on whether to pay an interim dividend, while NAB slashed its dividend to 30 cents per share.

In other news, a measure of Australian manufacturing showed activity contracting at its worst pace since 2009. That, coupled with news overnight that millions more Americans applied for unemployment benefits in April, darkened the mood after a relatively strong April.

Additionally, signs of growing tensions with China, Australia’s biggest trading partner, added to investor jitters. The two governments are at odds over calls for an independent inquiry into the origins of the coronavirus, with China warning of possible repercussions for imports from the resource-rich country.

Nikkei Follows Wall St Lower; Chip-Related Firms Under Pressure

Japanese shares retreated from a near-eight week peak on Friday, led by declines in chipmaking firms and as investors chose to re-shuffle the deck following a streak of earnings reports.

The benchmark Nikkei 225 Index settled at 19619.35, down 574.34 or -2.84%. However, it did manage to eke out a 1.9% gain for the week. The index also climbed 6.7% in April, marking its best month since October 2017.

In Tokyo, shares of semiconductor-related stocks tracked losses in their U.S. peers, after the Philadelphia semiconductor index tumbled 3.7% overnight.

Traders also said the release of earnings reports prompted some investors to book profits ahead of a long holiday weekend. Markets in Japan will be closed until Wednesday for the annual Golden Week holidays.

South Korea Posts Biggest Exports Fall Since 2009, First Trade Deficit Since 2012

South Korean exports plunged in April at their sharpest pace since the global financial crisis as the coronavirus pandemic hit demand and paralyzed the global economy and supply chains.

Exports slumped 24.3% year-on-year in April, trade ministry data showed on Friday, the worst contradiction since May 2009 but slightly slower than 25.4% plunge tipped in a Reuters survey. It slid 0.7% in the previous month.