Asian Stocks Slide as Fed Signals Slower Rate Cuts; Tech Sector Hit Hard

Asian equities experienced a sharp sell-off on Thursday, with technology stocks leading the decline after the Federal Reserve projected a slower pace of interest rate cuts in 2025. The cautious outlook dampened risk sentiment across the region, following a significant overnight drop on Wall Street.

The NASDAQ Composite recorded its steepest single-day loss in nearly five months, plunging 3.6%, as investors reassessed valuations in the tech sector amid a less accommodative monetary policy outlook.

Japanese Stocks Trim Losses After BOJ Decision
In Japan, the Nikkei 225 and TOPIX indices fell by 0.5% each, recovering slightly from earlier losses exceeding 1%. The Bank of Japan’s (BOJ) decision to keep interest rates steady helped stabilize local markets, as the yen weakened, offering support to export-focused industries.

The BOJ maintained its cautious stance, emphasizing that inflation is expected to pick up in 2025, nearing its 2% target. While the decision disappointed some investors who anticipated a December rate hike, it signaled stability in the short term, benefiting Japanese equities.

The BOJ’s earlier rate hikes in 2024 marked a historic departure from nearly a decade of ultra-loose monetary policy. Governor Kazuo Ueda has hinted at further tightening, though the timeline remains uncertain.

Tech Stocks Take a Beating Across Asia
Technology-heavy markets suffered the most, mirroring Wall Street’s tech slump. In South Korea, the KOSPI index fell 1.7%, weighed down by ongoing political uncertainty after President Yoon Suk Yeol’s impeachment.

Leading South Korean chipmakers SK Hynix and Samsung Electronics dropped 3.8% and 2.7%, respectively. These losses followed a 16% plunge in U.S.-based Micron Technology after its quarterly revenue guidance disappointed, casting doubts on the resilience of artificial intelligence-driven demand amid global economic challenges.

In Hong Kong, the Hang Seng Index shed 1%, driven by weakness in tech and chip-related stocks. Meanwhile, Chinese benchmarks, including the CSI 300 and Shanghai Composite, declined 0.4% and 0.7%, respectively. Losses in Chinese markets were mitigated by optimism surrounding Beijing’s plans for increased fiscal spending in 2025.

Broader Declines Across the Region
Australia’s ASX 200 posted a 1.8% drop, reflecting a broad-based sell-off in the region, while Singapore’s Straits Times Index slipped 0.2%.

India’s Nifty 50 futures signaled a mildly positive open, offering potential relief after three consecutive sessions of significant losses.

Outlook: Cautious Trading Ahead
The Federal Reserve’s “hawkish cut” and slower projected pace of rate reductions in 2025 have created a challenging environment for risk assets. As investors adjust to this new landscape, market participants will likely focus on central bank policies, geopolitical developments, and sector-specific headwinds, particularly in technology and chipmaking industries.