Asian markets continued to decline on Wednesday amid more concerns about economic conditions in China and as the partial U.S. government shutdown continued into its third week.
On Wednesday, Wall Street is expected to open negative after an overnight U.S. Labor Department report showed nonfarm productivity rose 1.3 percent in the first quarter compared to estimates of 1.4 percent.
Ahead of the Fed report, which was released at 8:30 a.m. Eastern, the S&P 500 futures were off 0.5 percent, the Dow Jones futures fell 0.75 percent and the Nasdaq 100 futures were down 0.6 percent. European markets are showing mild to modest declines.
In Asia, the Hang Seng Index continued to fall Tuesday, down 1.1 percent. The market saw steep losses in most major sectors including tourism companies that rely on tourism from the United States for growth. Chinese markets have fallen about 7 percent over the past month, with technology shares among the worst affected.
The rout has dragged down U.S. tech stocks and has one of the largest losses by a single stock over the past two years, with Apple shares being down by about 25 percent. Shares are down 9 percent since last Thursday. The Nasdaq 100 is down about 15 percent from the peak it hit in late January.
U.S. tech leaders face new challenges in a softening U.S. economy, the most ominous of which is the U.S.-China trade war, which intensified recently. According to an analyst from Nomura, tariffs will likely lead to another year of difficult-to-achieve economic growth.
“We remain concerned about the sustainability of such a slowdown as we believe the structural demand drivers are losing momentum,” Scott Turner wrote in a note.
These worries echoed those already expressed by executives of several top Silicon Valley companies, including Google’s Sundar Pichai and Amazon’s Jeff Bezos. These executives have been vocal about the difficulties they’re facing in China, which has spooked investors worldwide.
The Shenzhen composite index closed lower by more than 4 percent, the Shanghai composite index fell by 3.5 percent and the Hang Seng Index lost 1.1 percent. The Taiwanese market also fell, while Japanese markets didn’t close.
The declines come after Tuesday’s losses in the United States, the largest in two years. That followed Apple’s decision to lower its projected profits for the current quarter. In the wake of that news, a stock exchange in Shanghai forced a suspension of Apple’s stock exchange listing.
When Apple announced it would lower its predictions for results for the second quarter and the entire year, concerns began to spread about the broader U.S. economy. Soaring U.S. stock market valuations and booming tech sector stocks have kept consumers and businesses from spending.
The shutdown is the longest in American history, despite Democrats and Republicans both refusing to negotiate anything with one another on the issue. The shutdown affects about 800,000 federal workers, with 380,000 of them being impacted by the fact that they can’t work.
Democrats and Republicans last saw Democrats threaten a shutdown earlier this year over immigration. Even if a deal is eventually reached, it could still take weeks to work out.