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Asian stocks fall as US tech sinks; bonds steady

Nov 20 2018 08:23
Andreea Papuc, Bloomberg

Stocks in Asia declined on Tuesday after weakness in some of the biggest technology companies sent US stocks tumbling, adding to pessimism about a breakthrough in trade tensions.

Equities fell from Tokyo to Sydney as S&P 500 Index futures extended losses. Earlier, US software developers and semiconductor manufacturers led the US gauge lower on Monday amid a myriad of concerns swirling around the tech sector. Japanese automakers were under pressure with Nissan Motor tumbling after the arrest on misconduct allegations of the carmaker’s chairman, Carlos Ghosn. The dollar and Treasuries were little changed.

In the US session, the Nasdaq 100 Index plunged more than 35 to the lowest since April. Apple slumped on signs of slowing demand for iPhones, while Facebook's public image continued to weigh on its share price. Chipmaker Nvidia plunged almost 28% in two days after disappointing earnings, sending shock waves through chipmakers.

Investors are reassessing their expectations after several weeks of volatility spurred by fears of an escalation of the trade conflict and a slowing global economy. Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund firm, said that investors should expect low returns for a long time after years of low interest rates and quantitative easing have squeezed most of the returns out of assets in the US Meanwhile, optimism that relations between the US and China would improve at Group-of-20 meetings starting next week, dissipated.

“A breakthrough is really about slowing down the pace of tariffs or potentially not allowing the $200bn to move at year end up to a 25% tariff from a 10% tariff,” Darrell Cronk, president at Wells Fargo Investment Institute, said on Bloomberg TV. “Just an agreement to restart discussions and negotiations in the next year the markets would perceive as strong, positive and good for risk assets.”

Elsewhere, the pound stabilized as UK Prime Minister Theresa May appealed to business leaders to help deliver her Brexit deal, and Gibraltar emerged as a fresh sticking point. Bitcoin fell below $5 000 for the first time since October 2017. Crude traded around $57 a barrel.

The Australian dollar declined and 10-year bond yields climbed as the central bank reaffirmed the next move in interest rates “was more likely to be an increase,” though added that there was “no strong case” for a near-term policy adjustment in the minutes of November policy meeting.

Coming Up

Bank of England Governor Mark Carney appears before parliament on Tuesday. It’s a shortened trading week because of the Thanksgiving holiday in the US on Thursday. In addition, Black Friday, the day after Thanksgiving, marks the traditional start to the US holiday shopping season.

These are the main moves in markets:

Stocks

Japan’s Topix index fell 0.9% as of 14:05 in Tokyo. Australia’s S&P/ASX 200 Index dropped 0.5%. South Korea’s Kospi index lost 1.1%. Hong Kong’s Hang Seng Index declined 1.9%. Shanghai Composite Index retreated 1.6%. S&P 500 futures fell 0.3%. The S&P 500 sank 1.7%, while the Nasdaq 100 plunged 3.3%.

Currencies

The Japanese yen traded at 112.52/$. The offshore yuan was steady at 6.9379/$. The Bloomberg Dollar Spot Index was little changed. The euro traded at $1.1448, down 0.1$. The British pound traded at $1.2857.

Bonds

The yield on 10-year Treasuries held around 3.06%. Australia’s 10-year bond yield rose three basis points to 2.69%.

Commodities

West Texas Intermediate crude slipped 0.2% to $57.06 a barrel. Gold fell 0.1% to $1 222.63.

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