Asia-Pacific stock markets experienced a "Black Monday," with major indices falling sharply amid concerns over economic slowdown, geopolitical tensions, and ongoing pandemic impacts. Investors reacted to global uncertainties, leading to widespread sell-offs and increased volatility across the region.

On February 2nd, major stock indices in the Asia-Pacific markets closed with collective declines.

The Nikkei 225 Index fell by 1.25%, closing at 52,655.18 points; the Korea Composite Index dropped by 5.26%, closing at 4,949.67 points, marking the largest single-day decline since April 7, 2025. During trading on February 2nd, the Korea Composite Index briefly plummeted over 5%, triggering the circuit breaker and pausing trading for 5 minutes.

In terms of sectors, semiconductors and the AI industry chain were the main decliners, with Samsung Electronics falling over 6% and SK Hynix dropping more than 8%.

Following last week’s turbulence, the Indonesian market declined sharply again, with its benchmark Jakarta Composite Index falling nearly 5% by the close.

Last week, MSCI, the international index provider, issued a warning regarding the investability of the Indonesian stock market. Although Indonesian regulators have implemented a series of reforms addressing MSCI’s concerns, global commodity prices weakened on Monday, leading to declines in mining and energy stocks. As a major exporter of commodities, Indonesia’s stock market is highly sensitive to commodity prices, which makes the market pressures more complex.

Additionally, the S&P/ASX 200 Index in Australia closed down 1.02% at 8,778.6 points; the S&P/NZX 50 Index in New Zealand closed down 0.08% at 13,412.44 points.

Some market opinions suggest that the sharp fluctuations in precious metals prices may be the direct cause of the global stock market adjustments on Monday. Seoul Future Asset Securities analyst Seo Sang-Young stated that the volatility in gold and silver caused shocks in the commodities market, triggering liquidity shocks and margin calls among institutional investors, which in turn led to a significant decline in stock markets.

Meanwhile, the overall high valuation levels of global risk assets have also intensified profit-taking sentiment. Taking the Korean market as an example, the Korea Composite Index hit a new closing high on January 30th, with a total increase of 23.97% in January, the largest monthly gain since December 1998.

From precious metals to AI-driven tech stocks, the catalysts for these “crowded trades” cooling down include last week’s nomination of Kevin Warsh as the next Federal Reserve Chair. Invesco’s Chief Global Market Strategist Brian Levitt said that Warsh, during his tenure at the Fed, was considered one of the more “hawkish” members, having opposed rate cuts during the 2008 global financial crisis due to concerns over inflation risks. Initially, markets interpreted Warsh’s nomination as hawkish. Following the announcement, U.S. Treasury yields rose, the dollar strengthened, gold prices fell sharply, and stock index futures declined.

However, from a medium- to long-term perspective, Brian Levitt believes that Warsh may not be as hawkish as the market currently expects or as his past actions suggest. His background in policy-making and experience at the Fed could help maintain the independence of the Federal Reserve and stabilize the financial system. This could help stabilize inflation expectations and U.S. borrowing costs, both of which remain within manageable ranges. His experience in the private sector may also promote further deregulation of the banking industry and support credit expansion.

Western Securities (002926) research report analysis indicates that after the announcement of the Fed chair nomination last Friday, capital markets quickly priced in “hawkish” monetary policy expectations, easing concerns over Fed independence, leading to a V-shaped rebound in the dollar index and a sharp plunge in precious metals. However, whether the new Fed’s “rate cuts + balance sheet reduction” can bring the dollar index back up depends mainly on whether dollar credit can be restored. Restoring dollar credit is a long-term process, and the short-term market may be correcting overtrading.