Asian shares tumble after US stocks suffer steepest daily drop since 2020

Shares in Chinese technology companies led declines across the Asia-Pacific region in the wake of Wall Street’s worst day since the early months of the coronavirus pandemic as concerns mounted over global growth.

Hong Kong-listed shares in Tencent fell as much as 8.6 per cent on Thursday after the Chinese internet group reported its slowest revenue growth on record in the first quarter. The company recorded a 51 per cent fall in profits due to Beijing’s tech-sector crackdown and the impact of harsh Covid-19 lockdowns on consumer spending.

Charlie Chai, an analyst with 86Research, said “fairly underwhelming” results in the company’s gaming, advertising and new business services were “a reflection of the big picture [in China]” as a “downswing in business confidence translates to lower business spend”.

He added that the first-ever fall in domestic games revenue for Tencent “shows how harsh the regulation was” during Beijing’s crackdown on tech, which began almost a year ago.

The fall for China’s most valuable company helped drag Hong Kong’s Hang Seng Tech index down 4 per cent, while the broader Hang Seng benchmark shed 3.8 per cent. Elsewhere in the region, Japan’s Topix fell 2 per cent and China’s CSI 300 index of Shanghai- and Shenzhen-listed shares fell 0.8 per cent.

China’s worsening economic outlook also weighed on stock markets, as Standard Chartered cut its annual growth forecast for China to 4.1 per cent from 5 per cent, joining other of global investment banks including Goldman Sachs in downgrading economic expectations as “stringent Covid control measures disrupted production and consumption”.

The falls in Asia came on the heels of a 4 per cent fall in New York for the S&P 500 index, marking the biggest single-day drop since June 2020, with 98 per cent of the stocks included in the benchmark falling.

Target, the US retailer, plunged 25 per cent after it said higher freight, fuel and wage costs, as well as logistical disruptions, would hit profit margins. That warning came a day after Walmart, the world’s largest brick-and-mortar retail group, cut earnings guidance on surging inflation. Both retailers have notched their worst daily falls since 1987 this week.

Tech giants including Apple, Nvidia and Amazon all dropped more than 5 per cent, while the tech-dominated Nasdaq Composite index closed down 4.7 per cent.

Stock futures pointed to falls when European markets opened, with the FTSE 100 set to drop 0.7 per cent and the Euro Stoxx 50 expected to shed almost 1 per cent.

Additional reporting by Primrose Riordan in Hong Kong