Asian markets hit by recovery worries as tech drags Hong Kong
Hong Kong (AFP) - Asian equities retreated Thursday on growing concerns about the impact of the Delta coronavirus variant, while Hong Kong's tech giants led a sharp sell-off after China further tightened its grip on the gaming sector.
After enjoying a broadly healthy run-up at the start of September, markets were again on the back foot as traders reassess their growth outlook for this year in light of the fast-spreading Delta variant.
Wall Street's three main indexes finished well in the red after the Federal Reserve's closely watched Beige Book on the state of the US economy pointed to a slowdown caused by Covid-19 as well as problems with supply and a lack of workers.
It said growth had "downshifted" in July and August, which was "largely attributable to a pullback in dining out, travel, and tourism in most districts, reflecting safety concerns due to the rise of the Delta variant".
"Looking ahead, businesses in most districts remained optimistic about near-term prospects, though there continued to be widespread concern about ongoing supply disruptions and resource shortages," it added.
Analysts pointed out that while Covid remained a major headwind, the issue of supplies and cost pressures was noticeably prominent in the report.
"Momentum definitely seems to be slowing as far as the recovery is concerned," said Fiona Cincotta, at City Index.
"Before we'd been hearing that the Fed would tighten monetary policy and that's what was unnerving the market.Now, it's actually slightly softer data and also rising Covid cases."
Tokyo ended down with profit-taking playing a part after the Nikkei rose around five percent over the previous four days, while Sydney, Seoul, Wellington, Mumbai, Bangkok, Jakarta and Manila also fell.Shanghai, Singapore and Taipei edged up.
But the standout was Hong Kong, which sank more than two percent, dragged by tech giants after Beijing again cracked the whip.
Chinese authorities summoned gaming companies to demand they not focus on profits and "resist unfair competition to prevent excessive market concentration or even monopolies in the industry".
US debt ceiling
The state-run Xinhua agency reported that officials also called for the companies -- which included Tencent and NetEase -- to remove "obscene and violent content" and avoid "unhealthy tendencies, such as money-worship and effeminacy".
The move comes after authorities last week unveiled rules limiting the amount of time children could spend playing video games.
The latest announcement hammered industry giants, with Tencent down nearly six percent, NetEase tumbling more than eight percent, and Alibaba and JD.com more than six percent lower.
Investors had been cautiously edging back into the industry in recent sessions on hopes that the crackdown by China on a range of private enterprises may be easing off.
"This demonstrates the risk for those attempting to call the bottom with so much uncertainty still hanging," Bloomberg Intelligence analyst Matthew Kanterman said.
"I don't think the overnight news is a big departure from that which we already knew, but the reaction clearly signifies the skittishness of investors around any regulatory news."
There was little major reaction to news that China's producer price index, a gauge of the cost of goods at the factory gate, rose to a 13-year high, while consumer prices came in below forecasts.
London, Paris and Frankfurt tumbled at the open as investors awaited the conclusion of the European Central Bank's latest policy meeting later in the day, hoping for an idea about its plans for monetary policy.
Traders are also keeping tabs on Washington after Treasury Secretary Janet Yellen warned the US government would run out of money next month unless lawmakers hike the federal borrowing limit, which could lead to the world's top economy defaulting on its debt repayments.
In a letter to House Speaker Nancy Pelosi, she said that without lifting the limit "the United States of America would be unable to meet its obligations for the first time in our history".
Key figures around 0720 GMT
Tokyo - Nikkei 225: DOWN 0.6 percent at 30,008.19 (close)
Hong Kong - Hang Seng Index: DOWN 2.2 percent at 25,751.35
Shanghai - Composite: UP 0.5 percent at 3,693.13 (close)
London - FTSE 100: DOWN 1.0 percent at 7,023.34
Dollar/yen: DOWN at 110.08 yen from 110.24 yen at 2040 GMT
Pound/dollar: DOWN at $1.3770 from $1.3773
Euro/dollar: UP at $1.1818 from $1.1815
Euro/pound: DOWN at 85.82 pence from 85.77 pence
West Texas Intermediate: UP 0.2 percent at $69.42 per barrel
Brent North Sea crude: UP 0.3 percent at $72.82 per barrel
New York - Dow: DOWN 0.2 percent at 35,031.07 (close)