Asian stocks head lower after tech-led sell-off on Wall Street

Asian investors will be keeping a close eye on US jobs data, which are expected to show companies created about 1.4 million new jobs in August, a slightly slower pace than recent months [File: Lam Yik/Bloomberg]
Asian investors will be keeping a close eye on US jobs data, which are expected to show companies created about 1.4 million new jobs in August, a slightly slower pace than recent months

Asia’s stock fell the most in two weeks on Friday following a technology-led plunge on Wall Street, though gains in safer assets like bonds and dollars were muted as investors awaited United States jobs data to see if it triggers a bigger selloff.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.6 percent and looked set for a 2.4 percent weekly loss, its biggest since April.

Japan’s Nikkei dropped 1 percent, Hong Kong’s Hang Seng fell 1.8 percent and Australia’s ASX 200 2.8 percent.

That was shallower than the 5 percent plunge on the tech-heavy Nasdaq overnight or the S&P 500’s 3.5 percent drop. Those were the steepest Wall Street losses since June, but traders said a correction was overdue given recent frothy gains.

“It was steady rather than panic selling throughout,” said ING’s regional head of research Rob Carnell.

“It just doesn’t sound or feel like anything other than a bit of profit taking, if this was a massive risk-off move, you’d have expected the dollar to rally, and it didn’t really.”

The focus is on US payrolls figures due at 1230 GMT, which could lead to more selling if they disappoint economists’ expectations that some 1.4 million jobs were created in August.

US stock index futures came under pressure but rebounded off early-session lows in Asia. Nasdaq 100 futures were last down 1.3 percent, S&P 500 futures were down 0.3 percent. Dow futures were flat.

US markets chart [Bloomberg]

The dollar was steady, but a drop in the euro over last few days on talk that the European Central Bank is concerned about the regional bloc’s currency’s strength had the greenback heading for its best week in more than two months against a basket of currencies.

The euro seems to have arrested its slide for now, and sat at $1.1852. The Antipodeans were under gentle pressure while the yen was steady at 106.16 per dollar.

Bonds pared what was a pretty modest rise overnight, given the selloff in the equity market. Benchmark US 10-year bond yields rose 1.5 basis points on Friday, having fallen about 3 basis points overnight.

Thursday’s tumble was the biggest one-day percentage drop on the tech-focused Nasdaq 100 since March and the darling stocks of recent months were hit hardest.

Apple fell 8 percent, Tesla 9 percent and Microsoft 6 percent. Still, the plunge only wound the Nasdaq back as far as where it sat last Tuesday. It is still up 28 percent for the year so far and 73 percent higher than its March trough.

“No single factor sparked the sell-off,” said Kerry Craig, Global Market Strategist at JP Morgan Asset Management, citing more general worries the rally had run too far, too fast.

“However, this is unlikely to be a repeat of the tech wreck of the late 1990s, given how much the market and sector have changed,” he added.

Tech selling in Asia was limited. In South Korea, Samsung fell 1.6 percent and there was modest pressure on Apple suppliers in Shanghai and Taipei. But falls in consumer staples and financials led losses on the Hong Kong and China bourses.

Australia’s soaring consumer lender Afterpay, which seems to track the tech sector, fell 5 percent and is set for its worst weekly percentage drop since March.

In commodity markets, the stronger dollar has kept pressure on prices. Oil was headed for a weekly loss amid worries about demand as the US summer driving season draws to a close.

Brent crude futures fell 1 percent to $43.64 a barrel and US crude also fell 1 percent to 40.93 a barrel.

Gold drifted lower as equities sold off overnight but was last up 0.2 percent for the day at $1,934 an ounce.

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