Markets juggle rate cut excitement, Chinese gaming limits

Asian markets experienced a rollercoaster ride on Friday, grappling with conflicting influences as optimism about anticipated US interest rate cuts clashed with a tech-driven slump in Hong Kong.

The latter was triggered by China’s unveiling of fresh measures to restrict online gaming, sending shockwaves through the region.

Despite a recent upward trend in equities, driven by declining inflation and a softer job market, concerns emerged mid-week as traders took a pause, prompting analysts to question the sustainability of the rapid ascent.

However, buoyed by a robust performance on Wall Street, market players regained momentum on Friday.

The US economic growth, slightly lower than initially estimated for Q3, contributed to the prevailing sentiment that a cooling economy would likely prompt the Federal Reserve to cut rates in the near future.

Investors now eagerly await the release of the Personal Consumption Expenditures (PCE) Price Index, a pivotal gauge of inflation, with expectations that the data could influence the Fed’s decisions in the upcoming meeting.

Last week, the Fed’s “dot plot” forecast hinted at multiple rate cuts in the coming year, fueling market optimism. Traders are betting on substantial reductions, exceeding policymakers’ indications, reflecting a high level of confidence among investors.

While Asia initially mirrored the positive lead from the US, the atmosphere soured following Beijing’s announcement.

Tokyo, Singapore, Wellington, Taipei, Manila, Mumbai, and Jakarta posted gains, but Hong Kong plunged over one percent as China’s gaming restrictions weighed heavily on tech stocks.

Notably, tech giant Tencent experienced a significant dip of over 15 percent, erasing more than $50 billion from its valuation. Rival Netease also faced a brief downturn of over 30 percent, underscoring the sector’s vulnerability to regulatory changes.

Industry experts foresee substantial challenges for gaming companies in China, requiring a reevaluation of monetization models.

London, Paris, and Frankfurt joined the downward trend as markets opened in Europe.

Key Market Figures as of 0810 GMT:

Tokyo – Nikkei 225: UP 0.1 percent at 33,169.05 (close)
Hong Kong – Hang Seng Index: DOWN 1.7 percent at 16,340.41 (close)
Shanghai – Composite: DOWN 0.1 percent at 2,914.78 (close)
London – FTSE 100: DOWN 0.1 percent at 7,683.43
Currency and Commodities:

Dollar/yen: UP at 142.26 yen from 142.14 yen on Thursday

Euro/dollar: DOWN at $1.1002 from $1.1013

Pound/dollar: UP at $1.2696 from $1.2690

Euro/pound: DOWN at 86.66 pence from 86.76 pence

West Texas Intermediate: UP 0.8 percent at $74.49 per barrel

Brent North Sea crude: UP 0.8 percent at $80.01 per barrel

New York – Dow: UP 0.9 percent at 37,404.35 (close)