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Asian stocks slid Thursday after a sharp Wall Street slide amid deepening concerns about stretched valuations in equity markets, while the dollar and bonds strengthened.
FILE PHOTO: A man wearing a mask, after the outbreak of the coronavirus disease (COVID-19), stands on an overpass with an electronic board showing the stock indexes of Shanghai and Shenzhen, in the Lujiazui financial district. in Shanghai, China on January 6, 2021. REUTERS / Aly Song
NEW YORK: Asian equities tumbled Thursday after a sharp Wall Street slide amid deepening concerns about stretched valuations in equity markets, while the dollar and bonds strengthened.
In early Asia trades, Australia’s benchmark S & P / ASX 200 Index lost 1.99%, Japan’s Nikkei fell 2.28% and Hong Kong’s Hang Seng Index futures lost 0, 51%. S&P futures fell 1%.
The outcome of the Federal Reserve policy meeting added to market concerns. While the Fed kept the setup unchanged as expected, the authorities noted a worrying slowdown in the pace of the economic recovery.
On Wall Street, the benchmark S&P 500 index fell nearly 2.57%. The Dow Jones Industrial Average fell 2.05% and the Nasdaq Composite fell 2.61%.
Boeing Co dragged the Dow down 3.97 percent on a $ 6.5 billion charge for its delayed 777X and accident-plagued 737 MAX.
Michael McCarthy, chief market strategist at CMC Markets in Sydney, said the stock sell-off was surprising given the tech giants’ strong fourth-quarter results.
“A small response to sell the facts,” McCarthy said, noting that stock valuations are at all-time highs. “It may not have everything to do with the Fed.”
Noting that there was no urgency in buying dollars or bonds, he said: “Maybe what we need is a good old-fashioned panic” to cool valuations.
The S&P and Dow are down 0.14% and 0.99%, respectively, so far this year.
Yields on US Treasuries remained lower and the dollar index was up 0.559 percent, while the euro was down 0.07 percent at $ 1.21.
Profits from US companies weren’t enough to raise benchmarks. Microsoft Corp initially rose, but erased most of the gains to finish at 0.25%.
Shares of Facebook were up 0.68 percent, while those of Tesla fell 2.10 percent after the close. Shares of Apple also fell in extended trading after its results.
These heavyweights have become popular again as investors abandoned banks tied to the economy, energy, and small-cap stocks.
At the macro level, the firm stance of the Federal Reserve shifts the focus to how soon and how much fiscal stimulus the US Congress can agree to muster to support the economy.
“The focus is now firmly on the fiscal side of the equation,” Rick Rieder, director of global fixed income investments at BlackRock, said in a note.
Stimulus controls and extended unemployment insurance have been important to America’s recovery and are “much more targeted and effective in fighting a crisis … than ‘hard hitting’ monetary policy tools,” he added.
Although the U.S. vaccination program may help the economy reopen and recover more fully later this year, for now, Fed officials noted that they see it in a deep hole, with high levels of unemployment, sick small businesses and a recent spike in COVID-19 infections. .
The pan-European STOXX 600 Index lost 1.16% and MSCI’s global equities indicator lost 2.04%.
The Japanese yen weakened 0.01 percent against the dollar at 104.12 per dollar.
(Reporting by Alwyn Scott; Editing by Sam Holmes)
