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Asian Shares Extend Losses As Recession Worries Mount

asian market down 26sep22 lt

Asian stocks fell on Monday to extend recent losses, the dollar surged to new 20-year highs on rising yields, gold held at 2-1/2-year trough and oil extended last week's losses as recession fears gripped financial markets.

China's Shanghai Composite Index slumped 1.2 percent to 3,051.23 ahead of factory activity data due later in the week. Hong Kong's Hang Seng Index hit an 11-year low before recouping some losses to end the session 0.4 percent lower at 17,855.14.

The Chinese government raised the foreign exchange risk reserve requirements for financial institutions to stem a drop in the yuan, which touched a 28-month low against the dollar.

Japanese shares closed lower on concerns that high inflation and aggressive policy tightening could trigger a global economic recession. A measure of Japanese factory activity hit a 20-month low in September, adding to concerns about slowing global growth.

The Nikkei 225 Index plunged 2.7 percent to 26,431.55 as traders returned to their desks after a long weekend. The broader Topix ended 2.7 percent lower at 1,864.28.

Tech stocks led losses, with Tokyo Electron and SoftBank Corp falling 4-5 percent. Mazda Motor Corp. lost 5.6 percent on a Nikkei report that the automaker is discussing ending production in Russia.

Seoul stocks hit over two-year lows as a slew of weak European and U.K. business activity data as well as historic tax cuts unveiled by the British government fuelled fears of a global economic downturn.

The Kospi dove 3.0 percent to 2,220.94, extending losses for a fourth straight session and marking the lowest closing since July 27, 2020. Tech heavyweights Samsung Electronics and SK Hynix both fell over 1 percent, while LG Energy Solutions, Hyundai Motor and LG Chem lost 3-5 percent.

Daewoo Shipbuilding & Marine Engineering soared 13.4 percent after Hanwha Group was named as the preferred bidder to acquire the company.

Australian markets ended at a three-month low as a surging greenback weighed on the mining and energy stocks. The benchmark S&P ASX 200 Index dropped 1.6 percent to 6,469.40, while the broader All Ordinaries Index closed 1.8 percent lower at 6,667.50.

Fortescue Metals Group, BHP, Rio Tinto, Woodside Energy Group and Santos plummeted 5-7 percent as the dollar index climbed above 114.50 for the first time since 2002, supported by rising Treasury yields.

Gold miners also succumbed to selling pressure, while healthcare stocks gained ground, with CSL jumping 2.4 percent.

The New Zealand market was closed for a public holiday.

U.S. stocks tumbled on Friday to suffer losses for the fourth day running amid concerns over aggressive monetary policy tightening and foreign currency turmoil.

The Dow dropped 1.6 percent to its lowest closing level since November 2020, while the S&P 500 shed 1.7 percent and the tech-heavy Nasdaq Composite declined 1.8 percent to hit three-month closing lows.

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