Asian stocks dip as rate cut rally cools; Nikkei hit by Toyota scandal

Investing.com– Most Asian stocks fell on Thursday as investors locked-in recent profits after a dovish Federal Reserve triggered a week-long rally, with Japan’s Nikkei 225 leading losses amid a deepening scandal involving the country’s biggest automakers.

Regional stocks took a weak lead-in from Wall Street, as U.S. benchmarks retreated from near record highs on Wednesday. Stocks were hit with a mix of profit taking, while investors also reassessed expectations for early monetary easing from the Fed.

Japanese shares hit by automaker losses amid Toyota-Daihatsu scandal

The was by far the worst performer in Asia on Thursday, sinking 1.6% on steep losses in major automaker stocks.

Toyota Motor (NYSE:) Corp (TYO:)- Japan’s biggest automaker- sank nearly 4% after it said its Daihatsu unit will suspend all vehicle shipments in light of severe safety regulation breaches. Toyota was the biggest decliner on the Nikkei, as well as the biggest weight on the index.

The scandal covers about 64 models, and also involves models that Daihatsu had produced for Mazda Motor Corp (TYO:) and Subaru Corp (TYO:). The two fell between 2.7% and 4%, while peer Nissan Motors lost 3.1%.

Toyota did not specify the financial impact of the suspension. Daihatsu accounts for about 7% of Toyota’s overall sales.

Other automaker stocks were also caught in the selling pressure. Honda Motor Co Ltd (TYO:) lost 2.7%, while Isuzu Motors, Ltd. (TYO:) lost 1.7%.

Broader Japanese stocks saw heavy profit taking, after the Nikkei surged to 33-year highs on Wednesday. The index is among the best-performing Asian bourses this year, thanks largely to a dovish Bank of Japan.

Other Asian markets also saw some losses, but were sitting on strong gains over the past week after the Fed said it was done raising interest rates and will look at rate cuts in 2024.

Australia’s fell 0.4% from a 10-month high. South Korea’s lost 0.6% on losses in heavyweight technology stocks, and also came off a three-month high.

Local media reports showed that the South Korean government will raise the threshold for capital gains taxes on stock investors to 5 billion won ($3.8 million) from 1 billion won.

Chinese shares saw some strength, with the bluechip rising 0.6% after sinking to near five-year lows on Wednesday. But the fell 0.1%, while Hong Kong’s index lost 0.4%.

Concerns over a sluggish economic recovery weighed heavily on Chinese shares, which saw them severely lag their Asian peers this year. Staggered stimulus measures from Beijing also dented sentiment towards China.

Futures for India’s index pointed to a mildly positive open, after the index tumbled from near record highs in the prior session. But the Nifty still remained among the best-performing Asian bourses, having hit a series of record highs earlier in December on growing optimism over the Indian economy.

Upgrade your investing with our groundbreaking, AI-powered InvestingPro+ stock picks. Use coupon INVSPRO2024 to avail a limited time discount on our Pro and Pro+ subscription plans. Click here to know more, and don’t forget to use the discount code when checking out!