Stock market today: Asian shares decline after a mixed post-holiday session on Wall Street
Is Wall Street's Volatility Infecting Asia?
Asian shares mostly declined following a mixed trading session on Wall Street after a three-day holiday. While shares fell in Tokyo, Seoul, Sydney, and Hong Kong, Shanghai saw gains, buoyed by local government measures to support the property market. The mixed results come amidst varying performances in U.S. markets, where tech stocks helped offset broader declines influenced by rising bond yields.
What factors contributed to the decline of Asian shares on May 29, 2024?
Mixed Wall Street Performance and Local Market Dynamics
On May 29, 2024, Asian stock markets experienced a general decline influenced by a variety of factors. The downturn was primarily triggered by the mixed results from Wall Street's trading session following a three-day holiday weekend. In the U.S., while a few big tech stocks managed to support the S&P 500, most stocks saw a decline, leading to a cautious sentiment globally. Additionally, local dynamics within Asian markets also played a significant role. For instance, while shares in Tokyo, Seoul, Sydney, and Hong Kong fell, Shanghai saw gains, partly due to measures taken by Chinese city governments to bolster the property market. This mixed performance within Asia reflects both the influence of global market trends and region-specific factors.
Economic Indicators and Market Reactions
Furthermore, the Asian market's response was also shaped by broader economic indicators and market reactions. Oil prices saw an increase, which can have varying impacts on different sectors of national economies, potentially affecting stock markets. The performance of major indices like Japan’s Nikkei 225 and Hong Kong’s Hang Seng, which both dropped, indicates a regional hesitancy among investors, possibly due to economic signals from the U.S. and domestic concerns. The slight increase in U.S. Treasury yields, indicating higher borrowing costs, could have also contributed to a more cautious approach from investors, affecting Asian markets as they react to potential global economic tightening.
What specific measures by city governments in China helped lift the mainland Chinese markets?
City governments in China have taken several measures to support the property market, which helped lift the mainland Chinese markets. Some of these measures include:
- Eliminating remaining curbs on home-buying in major cities like Hangzhou and Xi'an, allowing potential buyers to purchase homes without restrictions on their social security records or "hukou" household registration status1.
- Loosening restrictions on purchases of second homes in Hangzhou, making it easier for people to invest in additional properties.
- Scrapping restrictions on home purchases in Chengdu, no longer reviewing the eligibility of potential homebuyers, including their household registration status, social security payments, or other conditions.
- Lifting home purchase curbs in Changsha, the capital city of Hunan province, making it easier for people to buy homes.
- Allowing local authorities to purchase homes directly from the market for social housing purposes, to help reduce the housing inventory and stabilize the real estate market.
These measures aim to revive the beleaguered real estate sector and spur growth in China's economy, as the property market has been in crisis since 2020, with millions of apartments left unfinished and numerous developers becoming insolvent1.