Asian shares mixed after another Wall Street tech sell-off

TOKYO (AP) — Asian shares were mixed yesterday following a selloff of technology shares on Wall Street.

Japan’s benchmark Nikkei 225 recouped early losses to rise 0.6 per cent to 23,383.87.

South Korea’s Kospi dropped 0.1 per cent to 2,394.09, while Australia’s S&P/ASX 200 lost 0.8 per cent to 5,859.40. Hong Kong’s Hang Seng gained 0.7 per cent to 24,471.29, while the Shanghai Composite rose 0.6 per cent to 3,255.28.

Shares were lower in Taiwan but mixed in Southeast Asia.

Analysts said investors are preoccupied with the coronavirus pandemic and hopes for development of a safe, effective vaccine.

While Big Tech is benefitting from the shift to online life that the pandemic and ensuing stay-at-home economy accelerated, critics said their stocks prices have surged too high.

“Big tech stocks might have seemed like safe havens, but they have found themselves at the centre of a brutal sell-off,” AxiCorp Chief Global Market Strategist Stephen Innes said.

The catch is that progress in curbing COVID-19 could hurt technology shares, Innes said.

A currency trader walks by the screen showing the foreign exchange rate between the United States (US) dollar and South Korean won at the foreign exchange dealing room in Seoul, South Korea. PHOTO: AP

“But keep your eye on the prize. A virus vaccine is a key to the second leg of growth recovery, which will be globally coordinated and could run for a while as doses are distributed gradually,” he said.

The latest gyrations on Wall Street followed a wild stretch where the S&P 500 careened from its worst three-day slump since June to its best day in nearly three months.

The selling came as the odds lengthen that Congress will deliver more aid to the economy before November’s elections, support that many investors said is crucial after federal unemployment benefits and other stimulus expired. Partisan disagreements on Capitol Hill have kept Congress at a seeming impasse.

ING Senior Economist Nicholas Mapa said risk aversion was dominating Asian trading with the technology sector weighing on overall sentiment.

“Investors are struggling to find a catalyst to reverse the recent downtrend with the much-anticipated United States (US) fiscal stimulus bill still in limbo,” he said.

Tech stocks accounted for the biggest share of the broad selloff on Wall Street. The sector has been at the centre of the market’s swings, hurt by criticism that their recession-defying surge in recent months was overdone.

The S&P 500 fell 1.8 per cent to 3,339.19, its fourth decline in five days. The index is on pace for its second straight weekly loss. The Dow Jones Industrial Average dropped 1.5 per cent, to 27,534.58. The Nasdaq gave up two per cent to 10,919.59. The Russell 2000 index of smaller company stocks lost 1.2 per cent, to 1,507.75.

Thursday’s selling followed a batch of new economic data on jobs and wholesale prices. The government said 884,000 workers applied for unemployment benefits last week. The number was flat from last week’s number, which was revised higher, and it’s the lowest it’s been since the number of layoffs began exploding in March due to the coronavirus pandemic.

A separate report showed inflation remains very weak at the wholesale level, suggesting demand remains slack, though it was stronger last month than economists forecast.

The market’s focus remains on big technology stocks that are so big their movements alone can move broad market indexes. Apple, Microsoft, Amazon, Facebook and Google’s parent company alone account for 23 per cent of the S&P 500, for example.

Many analysts said the recent tumult for technology stocks is not that surprising given how high they soared. Apple more than doubled in less than five months through the pandemic, Tesla surged 74.1 per cent last month alone and Zoom Video Communications earlier this month was up nearly 573 per cent for 2020.

Benchmark US crude oil lost 14 cents to USD37.16 a barrel in electronic trading on the New York Mercantile Exchange. Brent, the international standard, fell 16 cents to USD39.90 a barrel.

The US dollar inched up to JPY106.17 from JPY106.15 late Thursday. The euro rose to USD1.1835 from USD1.1816.