Global shares declined on Thursday, with Tokyo’s benchmark dropping over 1,300 points at one point and closing down by more than 3%, driven by pessimism following the Wall Street collapse.
France’s CAC 40 slipped 1.5% in early trading to 7,400.08, Germany’s DAX fell 1.2% to 18,161.70, and Britain’s FTSE 100 shed 1.1% to 8,066.27.
Futures for the S&P 500 fell 0.2%, while those for the Dow Jones Industrial Average rose 0.2%.
U.S. stock indexes experienced their worst losses since 2022 after profit reports from Tesla and Alphabet dampened the excitement around artificial-intelligence technology on Wall Street.
In Asia, Japan’s benchmark Nikkei 225 dropped 3.3% to 37,869.51, marking its lowest close since April.
The recently strengthening yen, which has recovered from trading above 160 Japanese yen to the dollar earlier this month, negatively impacts profits of Japanese exporters when repatriated. Toyota Motor Corp. shares dropped 2.6%, while Sony Group’s shares fell 5.4%.
In currency trading, the U.S. dollar edged down to 152.50 yen from 153.89 yen. The euro rose slightly to $1.0844 from $1.0841.
The yen has been gaining against the dollar largely due to speculation that the Bank of Japan will soon raise its near-zero benchmark interest rate. The central bank’s next policy meeting concludes on July 31.
“The major risk is that the BOJ might refuse to hike next week, causing the entire long yen trade to collapse. But that’s probably just a bad thought,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
Chinese shares fell as investors questioned a central bank decision to cut another key interest rate after several similar moves earlier this week. Hong Kong’s Hang Seng declined 1.7% to 17,021.91, while the Shanghai Composite fell 0.5% to 2,886.74.
South Korea’s Kospi dropped 1.7% to 2,710.65 after the government reported the economy contracted at a 0.2% rate in the last quarter. Among the region’s technology shares, Samsung Electronics fell nearly 2%, while Nintendo lost 2.4%. Tokyo Electron tumbled nearly 5%.
Australia’s S&P/ASX 200 shed 1.3% to 7,861.20.
On Wednesday, Wall Street saw the S&P 500 tumble 2.3% for its fifth drop in the last six days, closing at 5,427.13. The Dow Jones Industrial Average dropped 1.2% to 39,853.87, and the Nasdaq composite skidded 3.6% to 17,342.41.
Profit expectations are high for U.S. companies broadly, but particularly for the small group of stocks known as the “Magnificent Seven.” Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla need to keep delivering strong growth after driving most of the S&P 500’s record run this year.
Tesla was one of the heaviest weights on the market, tumbling 12.3% after reporting a 45% drop in profit for the spring, falling short of analysts’ forecasts.
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Tesla has become one of Wall Street’s most valuable companies not just for its electric vehicles but also for its AI initiatives, such as a robotaxi. According to UBS analysts led by Joseph Spak, the “challenge is that the time frame and probability of success is not clear.”
In energy trading, benchmark U.S. crude lost 59 cents to $77.00 a barrel. Brent crude, the international standard, fell 56 cents to $81.26 a barrel.
