Asian stocks fell on Wednesday after the sell-off of major technology companies on Wall Street drove down US indices. Crude oil prices and Treasury yields also declined.
Nikkei 225 NIK in Tokyo,
Lost 1.5% and the Hang Seng HSI,
In Hong Kong it decreased by 1%. Australia S & P / ASX 200 XJO,
Down 2.3% and SHCOMP Shanghai Composite,
Shed 1%. Kospi in South Korea 180721,
It decreased 0.8%.
Among the big losers in the technology sector was SoftBank Group Corp. 9984,
, Down 5%, Alibaba Group Holding 9988,
, Whose shares fell 2.5% in Hong Kong and the semiconductor maker SMIC 981,
That lost 2.7%.
Taiwan stocks also fell Y9999,
And most of Southeast Asia JAKIDX,
Problems related to the Astra-Zeneca virus vaccine trial and escalating Sino-US tensions have also worried investors.
“At the very least, the balloon of optimism blown off by the vaccine hopes has resulted in a major leak,” says Stephen Innes of AxiCorp. He said in a comment.
President Donald Trump’s talk of “separating” the US economy from China, as the presidential campaign intensifies, has heightened uncertainty as Washington seeks to curb the use of US technology by Chinese companies, citing national security concerns.
The relationship between the world’s two largest economies has been on the brink of a precipice for years, and hostility threatens to further undermine global growth at a time when the coronavirus pandemic has pushed many countries into recession.
Overnight, S&P 500 SPX,
It fell by 2.8% to 3331.84, closing its first streak in three days in nearly three months. Nearly 90% of all stocks were lower.
, Microsoft MSFT,
And amazon amzn,
It was among the major tech stocks that fell more than 4%, blowing up broad market indices. The Nasdaq Composite Index, brimming with technology stocks, is down 4.1% and has fallen 10% since hitting a record high on September 2.
Dow Jones Industrial Average DJIA,
It lost 2.2% to 27500.89. Nasdaq Composite Composite,
, Filled with technology stocks, fell 4.1% to 10,847.69 and has fallen 10% since hitting its latest record on September 2.
Technology stocks rose on expectations that they could continue to deliver strong earnings growth regardless of the economy and global health. Tech stocks in the S&P 500 are still up nearly 23% for 2020 so far, and Amazon stocks are up 70.5%, despite the devastation wreaking havoc on the economy from the pandemic.
Analysts say a wave of activity in stock options of major tech companies has fueled gains recently. With certain types of options, investors can make huge profits on a share, without having to pay the share price in full, as long as the share price continues to rise. If enough of these types of stock options are sold, it could trigger a buyout bout the stock that would accelerate gains.
But all this activity could quickly fade away and send prices down, as it did at the start of last week. Critics have long argued that big tech stocks have rallied significantly, even after accounting for their strong earnings growth.
Analysts described the sudden change as a technical correction.
“There is more talk of ‘risk aversion’,” said Robert Carnell of ING Economics in a report, “but that still sounds like unwinding of overbought positions, not a general trip to safety.” This is an orderly, albeit large, retreat. It is clear that there are still buyers on the way. “
The yield on the 10-year Treasury fell to 0.67% from 0.72% late Friday. But it is significantly higher than the 0.53% shown at the end of July.
The growing likelihood of Democrats and Republicans in Washington failing to find a deal to send more aid to unemployed workers is also dashing hopes of additional aid for the US economy.
Expectations that slow growth means that supply may outpace demand has pushed down oil prices. US Crude CLV20 Standard
It sank 28 cents to $ 36.48 a barrel in electronic trading on the New York Mercantile Exchange. It fell $ 3.01 to $ 36.76 a barrel on Tuesday. Brent BRNX20,
International standard, 25 cents to $ 39.53 per barrel. It fell $ 2.23 overnight to $ 39.78.
“The main reason for the oil disruption appears to be the re-emergence of US and Chinese risks, which cast doubt on assumptions of a fairly steady recovery in demand,” said Hayaki Narita of Mizuho Bank in a commentary.
In currency dealings, the US dollar USDJPY,
The Japanese yen slipped from 106.05 yen to 105.93 yen.