Asian stock markets experienced a downturn on Monday, reacting to weak economic data from the United States and the outcome of Germany’s closely watched election.
Investors struggled to maintain last week’s momentum after a sharp decline on Wall Street, where the Nasdaq tumbled by over 2%.
Why Are Markets Dropping?
A string of disappointing economic reports from the U.S. contributed to the losses:
- Services sector activity fell to a 25-month low in February.
- Consumer sentiment declined by nearly 10% compared to January.
- Inflation expectations hit a 30-year high, fueling concerns about price hikes.
These figures come amid growing fears that Donald Trump’s return to power could lead to aggressive trade policies, including import tariffs, tax cuts, and regulatory changes, which might drive inflation even higher.
As a result, investors are scaling back their expectations for the Federal Reserve to cut interest rates this year.
Asian Markets in the Red
The uncertainty hit major Asian markets, with most closing lower:
- Hong Kong’s Hang Seng Index fell 0.6%, cooling off after Friday’s tech-driven rally.
- Shanghai, Seoul, Mumbai, Taipei, Jakarta, Bangkok, and Wellington also saw losses.
- Sydney and Singapore managed slight gains, but overall sentiment remained weak.
German Election Results Boost Euro, Frankfurt Stocks
Despite the slump in Asia, Germany’s stock market and the euro strengthened after conservatives won the election.
The CDU/CSU alliance, led by Friedrich Merz, secured over 28% of the vote, defeating the Social Democrats (SPD), which came in third place.
However, there was unease as the far-right Alternative for Germany (AfD) surged to second place, nearly doubling its support to over 20%.
Political analysts predict that the next German government may prioritize stricter immigration policies, shifting focus away from economic recovery.
Oil Prices Slide on Weak Demand Concerns
Crude oil prices extended their losses after dropping nearly 3% on Friday. The weak U.S. economic data raised fears of lower fuel demand, while speculation grew that Trump might ease sanctions on Russia, potentially increasing global oil supply.
Key Market Figures
- Hong Kong – Hang Seng Index: ⬇️ 0.6% at 23,341.61
- Shanghai Composite: ⬇️ 0.2% at 3,373.03
- London – FTSE 100: ⬆️ 0.1% at 8,665.27
- Euro/Dollar: ⬆️ $1.0500 (from $1.0462)
- Brent Crude: ⬇️ 0.2% at $73.88 per barrel
- New York – Dow Jones: ⬇️ 1.7% at 43,428.02
With inflation fears and political uncertainty shaking global markets, investors will be closely watching the next moves from central banks and governments to stabilize economic conditions.
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