Asian shares retreated on Tuesday after a report showed US manufacturing contracted in May, the latest sign the economy is slowing.
Oil prices fell and US futures headed higher.
India’s Sensex led the losses in the region, falling 4.1% to 73,496.24. The vote count for the country’s six-week national elections appeared to show a lower-than-expected seat tally for incumbent Prime Minister Narendra Modi’s party, although his National Democratic Alliance was comfortable. leads its closest rival.
Japan’s Nikkei 225 index lost 0.2% to 38,837.46 and the Kospi in Seoul fell 0.8% to 2,660.69. Hong Kong’s Hang Seng was the outlier, gaining 0.5% to 18,494.28, while the Shanghai Composite index fell 0.1% to 3,076.96.
Australia’s S&P/ASX 200 lost 03% to 7,740.80. Taiwan’s Taiex lost 0.8%.
On Monday, US stock markets fell to a mixed close.
The S&P 500 edged 0.1% higher to 5,283.40, even as the majority of stocks in the index fell. The Dow Jones Industrial Average fell 0.3% to 38,571.03, and the Nasdaq index rose 0.6% to 16,828.67.
Treasury yields also fell in the bond market after the Institute for Supply Management report showed U.S. manufacturing contracted in May for the 18th time in 19 months. The manufacturing sector has been particularly hard hit by high interest rates aimed at controlling high inflation. This could also affect Asian economies that depend on exports.
Analysts questioned the significance of the report as the indicator has been declining for most of the past two years.
“So, why such a clear wave of American pessimism this time? Was it a made-up excuse to take profits? Or is there a deeper cause for concern lurking under the hood?” Mizuho Bank’s Tan Jing Yi said in commentary. “We suspect it’s a bit of both.”
The yield on the 10-year government bond fell to 4.39% from 4.50% at the end of Friday.
There are several other high-profile economic reports this week that could cause interest rates to fluctuate even further.
On Tuesday, the US government will show how many vacancies employers advertised at the end of April. And on Friday it will provide the final monthly update on overall employment growth and worker wages.
Shares of companies whose profits are most closely linked to the strength of the economy fell to the market’s worst losses. That included the oil and gas industry, as crude oil prices plummeted on concerns about weaker fuel demand growth.
Halliburton fell 5.3% and Exxon Mobil fell 2.4%. They fell when the price of a barrel of US oil fell by 3.5%. Brent crude, the international standard, lost a similar amount despite moves by Saudi Arabia and other oil-producing countries last weekend aimed at boosting the price.
On the winning side were some big tech stocks that continue to fly no matter what the economy does.
Nvidia climbed another 4.9% to take its gain for the year to 132.2% after unveiling new products and services over the weekend. There are huge gains in staving off criticism that investors have become overzealous about the prospects for AI. Nvidia was by far the strongest force pushing the S&P 500 higher.
The jump was even bigger in another corner of Wall Street, well accustomed to stomach-churning swings, both up and down.
GameStop rose 21%, a move reminiscent of the early 2021 rocket ride that shook Wall Street and brought the term “meme stock” into the parlance of our time. GameStop jumped after a Reddit account associated with a central character in the 2021 episode said it had built up a stake of 5 million shares, along with options to buy more. Sunday night’s post said the position was worth $181.4 million.
In other trades early Tuesday, U.S. benchmark crude lost 85 cents to $73.37 a barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, lost 77 cents to $77.59 a barrel.
The US dollar rose from 156.10 yen to 156.13 Japanese yen. The euro fell from $1.0904 to $1.0902.
