Asian stocks have now fallen for a fourth consecutive session, driven by diminished expectations for Federal Reserve interest rate cuts and a continued selloff in Chinese equities.
The MSCI Asia Pacific excluding Japan Index dropped as much as 1.7%, hitting its lowest level since August of last year.
Key contributors to this regional decline included TSMC, Samsung Electronics (KS:005930), and Hon Hai (TW:2317).
The steepest losses were recorded in Taiwan and the Philippines, with Indian stocks also taking a hit as the rupee slid to a new low. Japanese markets were closed for a holiday, offering some respite.
The broader selloff in Asian markets has been compounded by stronger-than-expected U.S. jobs data, which has led to a reevaluation of the Federal Reserve’s potential rate cuts for this year.
Chinese stocks have been particularly hard hit, with escalating trade tensions under the Trump administration pushing the MSCI China Index into bear market territory last week.
This weak start to the year reflects a risk-averse shift among investors, who are taking profits in Chinese markets following their strong performance last year.
Now, investors are closely watching for signs of policy measures that could help stimulate the economy. On Monday, China’s central bank vowed to bolster support for the yuan and improve its management of the foreign exchange market.
Despite these efforts, the yuan continues to hover near an all-time low after months of declining against the dollar.
Adding a glimmer of positivity, data revealed a 10.7% increase in China’s exports for December, exceeding expectations.
Total shipments for the year reached a record $3.6 trillion. Yet, Chinese stocks remain under pressure despite these favorable trade numbers.
However, strategists at Goldman Sachs Group Inc. (NYSE:GS) remain optimistic about Chinese equities. Despite the current downturn, they predict an approximate 20% rise in major benchmarks by the end of the year, signaling confidence in a market rebound.