Tech Selloff Extends Into Asia
May 11 2021 - 1:23AM
Dow Jones News
By Xie Yu
A technology-led selloff extended into global markets Tuesday,
with concerns about rising interest rates, high valuations and
regulatory risk weighing on highflying internet companies.
U.S. stock futures fell, suggesting American markets could come
under fresh pressure on Tuesday after falling in the previous
session. By early afternoon Hong Kong time, Nasdaq 100 futures
stood 1.0% lower, while S&P 500 futures declined 0.5%.
Asian markets were following their U.S. peers lower as concerns
built about quickening inflation, even as U.S. monetary policy was
easy and tech shares had grown more expensive, said Grace Tam,
chief investment adviser for BNP Paribas Wealth Management in Hong
Kong.
Ms. Tam said those worries were exacerbated by Chinese
regulators' tougher stance toward its tech giants. "The overall
sentiment on Chinese tech firms has been weak," she said.
Investors worry that surging inflation could force the U.S.
Federal Reserve to raise rates sooner than it currently expects.
Prices of commodities such as copper, crude oil, iron ore and
lumber have jumped and a survey Monday showed U.S. households'
expectations of inflation a year from now hit 3.4% in April, the
highest reading since September 2013.
Higher interest rates tend to weigh most on the valuations of
fast-growing companies--such as tech firms--since their worth
depends in large part on forecast profits years from now. The Fed,
under Chairman Jerome Powell, has stressed it won't be swayed by
one-off price increases driven by economic reopening.
By early afternoon Hong Kong time, the local benchmark Hang Seng
Index had lost 2.2%. Indexes across the region pulled back, with
declines ranging from 0.3% for the Shanghai Composite to 2.9% for
Taiwan's Taiex.
Meituan, the Chinese food-delivery giant, plunged by 7.9%,
building on a 7.1% decline in the previous session, as investors
reassessed its chances of coming under greater regulatory
scrutiny.
Also in Hong Kong, Tencent Holdings Ltd. retreated 2.9% and the
Hang Seng Tech index lost 3.8%. Among the region's other large tech
stocks, Japan's SoftBank Group Corp. fell more than 5%, while
Taiwan Semiconductor Manufacturing Corp. dropped 2.7%.
On Monday, the Nasdaq Composite shed 2.5% and the S&P
retreated 1%, with semiconductor companies among the biggest
individual decliners.
U.S. Treasury bond prices rose Tuesday. That pushed yields,
which move in the opposite direction, slightly lower. The yield on
the 10-year Treasury note declined to 1.593%, according to
Tradeweb, down from 1.601% on Monday.
Write to Xie Yu at Yu.Xie@wsj.com
(END) Dow Jones Newswires
May 11, 2021 01:08 ET (05:08 GMT)
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