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Feb. 25, 2021, 11:18 p.m. EST

Asian shares sink after tech rout pulls Nasdaq lower

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By Associated Press

BANGKOK — Asian shares skidded Friday after rising bond yields triggered a broad sell-off on Wall Street that erased the markets gain for the week and handed the Nasdaq composite index its steepest loss since October.

Tokyo, Hong Kong and Sydney all fell 2% or more in early trading Friday.

The tech-heavy Nasdaq shed 3.5% on Thursday while the S&P 500 dropped 2.4%, led lower by heavy selling in technology and communications companies.

The sell-off gained momentum when the yield on the 10-year U.S. Treasury note moved above 1.5%, a level not seen in more than a year and far above the 0.92% it was trading at only two months ago. That move raised the alarm on Wall Street that yields, and the interest rates they influence, will move higher from here.

Early Friday, the yield on the 10-year U.S. Treasury note was 1.47%.

Tokyo’s Nikkei 225 /zigman2/quotes/210597971/delayed JP:NIK +0.14% lost 2.7%, while the Hang Seng /zigman2/quotes/210598030/delayed HK:HSI +0.61% in Hong Kong lost 2.4%. The Shanghai Composite index /zigman2/quotes/210598127/delayed CN:SHCOMP +0.81% lost 1.8%. South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +0.13% declined 3% and Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.07% slipped 2%.

Shares rose in Malaysia /zigman2/quotes/210598052/delayed MY:FBMKLCI +0.0081% but fell in Singapore /zigman2/quotes/210597985/delayed SG:STI +0.53% , Taiwan /zigman2/quotes/210597977/delayed TW:Y9999 +0.48% and Indonesia /zigman2/quotes/210597981/delayed ID:JAKIDX +0.11% .

Bond yields have been rising this month, reflecting growing confidence among investors that the economy is on the path to recovery, but also expectations that inflation is headed higher, which might prompt central banks eventually to raise interest rates to cool price hikes. Rising yields can make stocks look less attractive relative to bonds to some investors, which is why every tick up in yields has corresponded with a tick down in stock prices.

In the past, such situations have triggered sell-offs in what has been called a “taper tantrum,” referring to a possible tapering off of monetary stimulus.

“This feels like a washout of ‘safe’ positions, and ultimately the market will continue to test the Fed’s resolve to keep a lid on rates. We’re in a precarious spot where any additional easing might be misinterpreted as the Fed losing faith in its own ability to control the market, which would be self-reinforcing,” Stephen Innes of Axi said in a commentary.

The S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.36% fell 96.09 points to 3,829.34. The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.48% lost 1.8%, to 31,402.01. The Nasdaq /zigman2/quotes/210598365/realtime COMP +0.10% slid 478.54 points to 13,119.43.

The U.S. economy grew at an annual pace of 4.1% in the final three months of 2020, slightly faster than first estimated, the government reported. Higher government spending and accelerated vaccine distribution could lift growth in the current quarter, ending in March, to 5% or even higher, economists believe.

Economies in Asia are also on the mend, though rollouts of vaccines lag behind the U.S. effort and pandemic-related travel restrictions and quarantine requirements are still in effect for many countries.

Global stock markets have soared over the past six months on optimism about coronavirus vaccines and central bank promises of abundant credit to support struggling economies. Those sentiments have faltered due to warnings the rally might be too early and that inflation might rise.

Federal Reserve Chair Jerome Powell has affirmed the Fed’s commitment to low interest rates in testimony to legislators in Washington this week.

The central bank earlier indicated it would allow the economy to run hot to make sure a recovery is well-established following its deepest slump since the 1930s. Powell said it might take more than three years to hit the Fed’s target of 2% inflation.

Investors also are looking for Congress to approve President Joe Biden’s proposed economic aid plan. That includes $1,400 checks to most Americans. However, the plan faces staunch opposition from Republicans and is still subject to negotiations. Democrats have chosen to use the legislative process known as reconciliation that would allow them to pass the bill without GOP support.

In other trading Friday, U.S. benchmark crude oil shed 36 cents to $63.17 per barrel in electronic trading on the New York Mercantile Exchange. It gained 31 cents to $53.22 per barrel on Thursday. Brent crude , the international standard, gave up 29 cents to $65.82 per barrel.

The dollar /zigman2/quotes/210561789/realtime/sampled USDJPY -0.0147% fell to 105.98 Japanese yen from 106.20 yen on Thursday.

JP : Nikkei
+40.68 +0.14%
Volume: 0.00
April 16, 2021 3:15p
HK : Hong Kong Exchange
+176.57 +0.61%
Volume: 2.19M
April 16, 2021 4:09p
CN : China: Shanghai
+27.63 +0.81%
Volume: 25.86B
April 16, 2021 3:01p
KR : Korea Exchange
+4.29 +0.13%
Volume: 985,278
April 16, 2021 3:32p
+4.90 +0.07%
Volume: 627,013
April 16, 2021 5:49p
MY : Malaysia
+0.13 +0.0081%
Volume: 0.00
April 16, 2021 5:05p
SG : Singapore: SGX
+16.99 +0.53%
Volume: 0.00
April 16, 2021 5:20p
TW : Taiwan Stock Exchange
+82.08 +0.48%
Volume: 0.00
April 16, 2021 1:33p
ID : Indonesia Stock Exchange
+6.76 +0.11%
Volume: 0.00
April 16, 2021 3:00p
+15.05 +0.36%
Volume: 2.21B
April 16, 2021 5:15p
US : Dow Jones Global
+164.68 +0.48%
Volume: 348.18M
April 16, 2021 5:15p
US : Nasdaq
+13.58 +0.10%
Volume: 4.03M
April 16, 2021 5:16p
US : Tullett Prebon
-0.0160 -0.0147%
Volume: 0.0000
April 16, 2021 4:59p

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