Asian stock markets showed signs of uncertainty, with the Tokyo Stock Exchange’s Nikkei index dropping 0.88%. Despite China’s reported 5% economic growth, weak consumption and mixed economic indicators raised concerns. Nintendo’s stock fell over 6% after announcing its upcoming console, the Switch 2, amid disappointing profit reports. The Japanese yen stabilized as rate hike expectations grew, while oil prices increased due to supply concerns linked to U.S. sanctions on Russia.
Asian Stock Markets Experience Hesitation
On Friday, June 17, Asian stock markets displayed uncertainty as stronger-than-expected economic growth in China failed to alleviate worries about sluggish consumption and escalating trade tensions. In Tokyo, Nintendo’s stock took a significant hit following the announcement of its upcoming console.
Mixed Signals from China
At approximately 03:30 GMT, the Tokyo Stock Exchange recorded a decline in the benchmark Nikkei index by 0.88%, settling at 38,234.47 points, while the broader Topix index dropped 0.81% to reach 2,666.62 points. Seoul’s market saw a decrease of 0.30%, and Sydney’s market fell by 0.20%.
After experiencing a rally over the past two sessions, driven by a sense of relief from a recent U.S. inflation index indicating a slowdown, the momentum quickly dissipated. Wall Street’s close in negative territory on Thursday, heavily impacted by technology stocks, added to the nervous atmosphere ahead of Donald Trump’s anticipated return to the White House on Monday.
Investors reacted to a series of mixed economic reports from China released on Friday. While China reported a 5% economic growth for 2024, matching government targets and slightly exceeding expectations, consumption remains weak. Retail sales increased by only 3.5% for the year, a stark decline from the 7.2% growth seen in 2023. Zichun Huang from Capital Economics noted that while the economy showed signs of recovery in the last quarter due to eased monetary policy and increased government spending, growth is expected to slow again in 2025.
Despite the overall concerns, some positive data from the fourth quarter provided a boost to Chinese markets. In Hong Kong, the Hang Seng index rose by 0.16% to 19,553.62 points, while the Shanghai composite index gained 0.40% and the Shenzhen index climbed by 0.50%.
Nintendo’s Stock Takes a Dive
Nintendo, the Japanese video game powerhouse, saw its stock plummet by over 6% in early trading on the Tokyo Stock Exchange. By 03:30 GMT, the stock was down 5.37%. The company recently released a brief video highlighting the technical features of its upcoming console, the Switch 2, which is set to launch in 2025. This new console aims to succeed the original Switch, which has become the third best-selling console in video game history since its launch in 2017.
However, Nintendo’s market performance has deteriorated, with the company reporting a staggering 60% drop in net profit year-on-year during the first half of its fiscal year that began in April 2024. Anticipation surrounding the new console had previously inflated investor expectations, but the recent announcement failed to provide new insights. Krysta Yang, host of the Kit & Krysta podcast, remarked that the lack of fresh information might have led investors to feel underwhelmed, especially since the console’s release is still a year away.
Yen Stabilizes Amid Rate Hike Speculations
The Japanese yen stabilized after several sessions of significant gains, buoyed by rising expectations of an interest rate hike by the Bank of Japan (BoJ) in the coming week, following comments from officials that hinted at such a move. By 03:30 GMT, the yen had declined by 0.18% against the U.S. dollar, trading at 155.46 yen per dollar.
Meanwhile, the oil market resumed its upward trajectory, driven by ongoing concerns regarding supply disruptions due to U.S. sanctions on Russia. The U.S. WTI crude rose by 0.65% to $79.19 per barrel, while North Sea Brent crude increased by 0.41% to $81.62 per barrel.