By Associated Press
Asian shares declined on Wednesday after a selloff of big technology stocks on Wall Street pulled U.S. benchmarks lower. Crude oil prices and Treasury yields also weakened.
Tokyo’s Nikkei 225 /zigman2/quotes/210597971/delayed JP:NIK -1.52% lost 1.5% and the Hang Seng /zigman2/quotes/210598030/delayed HK:HSI -1.95% in Hong Kong dropped 1%. Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.55% tumbled 2.3% and the Shanghai Composite index /zigman2/quotes/210598127/delayed CN:SHCOMP -1.47% shed 1%. South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -2.56% fell 0.8%.
Among big losers in the technology sector were SoftBank Group Corp. /zigman2/quotes/207303954/delayed JP:9984 -1.65% , which fell 5%, Alibaba Group Holding /zigman2/quotes/215112034/delayed HK:9988 -3.11% , whose shares fell 2.5% in Hong Kong and semiconductor maker SMIC /zigman2/quotes/207270096/delayed HK:981 +3.41% , which lost 2.7%.
Shares also fell in Taiwan /zigman2/quotes/210597977/delayed TW:Y9999 -0.92% and most of Southeast Asia /zigman2/quotes/210597981/delayed ID:JAKIDX -0.31% /zigman2/quotes/210597985/delayed SG:STI -1.10% .
Troubles with Astra-Zeneca’s coronavirus vaccine trial and simmering China-U.S. tensions also have rattled investors.
“At a minimum, the optimism balloon floated by vaccine hopes has sprung a sizable leak,” Stephen Innes of AxiCorp. said in a commentary.
Talk by President Donald Trump of “decoupling” the U.S. economy from China, as the presidential campaign heats up has ramped up uncertainty as Washington seeks to limit use of U.S. technology by Chinese companies, citing national security concerns.
The relationship between the world’s two largest economies has been on edge for years, and the antagonism threatens to further undermine global growth at a time when the coronavirus pandemic has pushed many countries into recession.
Overnight, the S&P 500 /zigman2/quotes/210599714/realtime SPX -1.21% fell 2.8% to 3,331.84, clinching its first three-day losing streak in nearly three months. Nearly 90% of all shares were lower.
Apple /zigman2/quotes/202934861/composite AAPL -5.60% , Microsoft /zigman2/quotes/207732364/composite MSFT -1.10% and Amazon /zigman2/quotes/210331248/composite AMZN -5.45% were among the Big Tech stocks to sink more than 4%, torpedoing broad market indexes. The Nasdaq composite, which is packed with tech stocks, dropped 4.1% and is down 10% since it set its last record high on Sept. 2.
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.59% lost 2.2% to 27,500.89. The Nasdaq composite /zigman2/quotes/210598365/realtime COMP -2.45% , which is packed with tech stocks, dropped 4.1% to 10,847.69 and has fallen 10% since it set its latest record on Sept. 2.
Tech stocks have soared on expectations they can continue to deliver strong profit growth regardless of the economy and global health. The tech shares in the S&P 500 are still up nearly 23% for 2020 so far, and Amazon has rocketed 70.5%, despite the devastation to the economy from the pandemic.
Analysts say a flurry of activity for stock options of Big Tech companies goosed the gains even further recently. With certain kinds of options, investors can make huge profits on a stock, without having to pay for its full share price, as long as the stock’s price keeps rising. If enough of these kinds of stock options are getting sold, it can create a buying frenzy for the stock that accelerates the gains.
But all that activity can unwind quickly and send prices tumbling, as it did beginning last week. Critics have long been saying that big technology stocks had shot too high, even after accounting for their strong profit growth.
Analysts have characterized the abrupt about-face as a technical correction.
“There is more talk of ‘risk-off,’ but this still feels more like an unwinding of overbought positions, rather than a generalized flight to safety,” Robert Carnell of ING Economics said in a report. “This is an orderly if substantial decline. There are still clearly buyers on the way down.”
The yield on the 10-year Treasury has fallen to 0.67% from 0.72% late Friday. But it’s notably higher than the 0.53% on offer at the end of July.
The growing likelihood that Democrats and Republicans in Washington will fail to find a deal to send more aid to unemployed workers is also dashing hopes for extra help for the U.S. economy.
Expectations that slower growth means supply may outstrip demand has dented oil prices. Benchmark U.S. crude sank lost 28 cents to $36.48 per barrel in electronic trading on the New York Mercantile Exchange. It slumped $3.01 to $36.76 per barrel on Tuesday. Brent crude , the international standard, shed 25 cents to $39.53 per barrel. It declined $2.23 overnight to $39.78.
“The overarching reason for oil’s buckle appears to be re-emergence of US-China risks casting serious doubt on assumptions of fairly steady demand recovery.,” Hayaki Narita of Mizuho Bank said in a commentary.
In currency dealings, the U.S. dollar /zigman2/quotes/210561789/realtime/sampled USDJPY +0.0526% slipped to 105.93 Japanese yen from 106.05 yen.