Asia stocks follow Wall St tumble on valuation worries


ASIAN stocks skidded on Thursday following a sharp Wall Street decline amid deepening concerns about stretched valuations in equities markets, while the dollar and bonds strengthened.

In early Asian trade, Australia's S&P/ASX 200 benchmark lost 1.99%, Japan's Nikkei fell 2.28% and Hong Kong's Hang Seng index futures lost 0.51%. S&P futures pulled back 1%.

Adding to the market worries was the outcome of Federal Reserve's policy meeting. While the Fed kept settings unchanged as expected, policymakers flagged a concerning 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 dropped 2.61%.

Boeing Co dragged on the Dow by falling 3.97% on a $6.5 billion charge for its delayed 777X jetliner and crash-plagued 737 MAX.

Michael McCarthy, chief market strategist at CMC Markets in Sydney, said the wider stock selloff was surprising, given strong fourth-quarter results from tech giants.

"A little bit of a sell-the-fact response," McCarthy said, noting stock valuations are at toppy levels. "It might not have everything to do with the Fed." Noting there was no urgency in dollar or bond-buying, 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.

U.S. Treasury yields remained lower, and the dollar index rose 0.559%, with the euro down 0.07% to $1.21.

Upbeat U.S. corporate earnings were not enough to pull the benchmarks higher. Microsoft Corp initially rose but erased most of the gains to end up 0.25%.

Facebook shares edged up 0.68% while Tesla fell 2.10% after the close. Apple shares also dipped in extended trade after its results.

These heavyweights have come back into favor as investors dumped economy-linked banks, energy and small-cap stocks.

On the macro level, the Fed's steady stance shifts the spotlight to how soon and how much fiscal stimulus the U.S. Congress can agree to muster to support the economy.

"The focus is firmly on the fiscal side of the equation now," Rick Rieder, BlackRock's chief investment officer of global fixed income, said in a note.

Stimulus checks and extended unemployment insurance have been important to the U.S. recovery and are "far more targeted and effective in combating a crisis...than 'blunt' monetary policy tools," he added.

Though the U.S. vaccination program may help the economy reopen and rebound more fully later this year, for now Fed officials signaled they see it in a deep hole, with high levels of joblessness, ailing small businesses, and a recent surge in COVID-19 infections.

The pan-European STOXX 600 index lost 1.16% and MSCI's gauge of stocks across the globe shed 2.04%.

The Japanese yen weakened 0.01% versus the greenback at 104.12 per dollar. - Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

Federal Reserve , Wall Street , MSCI , S&P 500

   

Did you find this article insightful?

Yes
No

100% readers found this article insightful

Next In Business News

Tenaga forecasts rebound in revenue
Mustapa: 12th Malaysia Plan to be tabled when Parliament reconvenes
Biggest players in short-selling are getting a pass
Nothing the stock market does ever scares retail daredevils
US Senate passes US$1.9 trillion relief bill
AirAsia Group plans air taxi, drone delivery service
Tengku Zafrul: Govt tapping into more data for effective aid
AirAsia recovering well via digital transformation
Texas grid operator made $16bil price error during winter storm, watchdog says
CPO futures to see quiet trading next week

Stories You'll Enjoy


Vouchers