By Kenan Machado
Global equities remained under selling pressure on Friday with Japan’s benchmark index leading declines in Asia, tracking overnight weakness on Wall Street on concerns over the U.S. tax-overhaul plan.
Key U.S. stock indexes slid as the U.S. Senate’s plan to push through a different tax proposal than what the House of Representatives released last week caused some investors to question the Republicans’ ability to get a bill through to the White House.
The Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -0.79% was down 1.4%, adding to Thursday’s declines, following the market’s recent strong run that saw the index close at a 25-year high on Wednesday. Stocks in Tokyo were also hit by further gains in the yen, with the U.S. dollar trading at around ¥113.31, compared with ¥113.59 at Thursday’s stock-market close.
“Investors are slowly unwinding their expectations from the Trump tax bill,” said Margaret Yang, market analyst at CMC Markets. Given the significant run-up in global shares over the past few weeks, traders took cues to take profit, she said.
Chip-maker stocks led Friday’s declines in Tokyo, extending weakness from the previous session, after technology giant Qualcomm /zigman2/quotes/206679220/composite QCOM -3.72% signed significant, but preliminary deals with three Chinese companies to supply components.
The tie-ups fueled fears that other companies in the region that rely on Qualcomm’s patents to develop and make chips would be at a disadvantage.
Shares of Renesas Electronics /zigman2/quotes/203872935/delayed JP:6723 -0.82% and Rohm were down about 1% after opening down around 2.5% each. In Korea, the Kospi index /zigman2/quotes/210598069/delayed KR:180721 -1.28% was down 0.4%, with Samsung Electronics /zigman2/quotes/209800866/delayed KR:005930 -2.42% dropping as much as 1% and chip maker SK Hynix /zigman2/quotes/206420319/delayed KR:000660 -3.47% losing as much as 1.7%.
Elsewhere, Shanghai’s benchmark index /zigman2/quotes/210598127/delayed CN:SHCOMP -0.83% was off 0.3%, while Taiwan’s Taiex also lost 0.3%.
However, Hong Kong shares reversed early losses, and the Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.73% was last trading up 0.1%, led by a 3.7% jump in Apple supplier AAC Tech /zigman2/quotes/201441510/delayed HK:2018 -2.81% , which plans to release January-September earnings later Friday. Analysts expect the company to present another set of robust results. Also, blue-chip insurer Ping An /zigman2/quotes/210315058/delayed HK:2318 -0.56% rose 1.3% to a fresh intraday record.
Meanwhile, Australia’s benchmark index /zigman2/quotes/210598100/delayed AU:XJO -2.31% was down 0.4%, with BHP Billiton /zigman2/quotes/201448516/delayed AU:BHP -2.15% and Rio Tinto /zigman2/quotes/200083756/delayed AU:RIO -1.83% both falling 2.3%, likely on profit-taking following their double-digit gains so far this year.
The S&P/ASX 200 reached its highest level since 2008 this week after rising 4% in October, its best month this year. It had lagged behind the region throughout 2017.
“The rally [in Australia] doesn’t have substance behind it,” with momentum from international markets carrying it higher, said Shane Chanel, an equities adviser at ASR Wealth Advisers.
Overnight in the U.S., the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -3.15% shed 0.4% and the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -2.77% fell 0.6%. Technology stocks in the S&P 500 /zigman2/quotes/210599714/realtime SPX -3.03% , the best-performing sector of the year so far, fell 0.9% on Thursday.
In commodities, oil futures were weaker in Asian trade following a modest rebound overnight. Futures contracts for Brent and Nymex were trading down around 0.2%.
Also, energy stocks in the region faced selling pressure, with Santos /zigman2/quotes/207349564/delayed AU:STO -3.23% and Oil Search /zigman2/quotes/204702973/delayed AU:OSH -2.66% in Australia down 3.3% and 1.1%, respectively. Japan Petroleum /zigman2/quotes/201212147/delayed JP:1662 -1.69% off 1.1% in Tokyo.