(Sept 4): Asian stocks looked set to end the week with declines after U.S. equities tumbled by the most in almost three months, with the rotation away from high-flying tech stocks gaining steam as investors questioned the sustainability of lofty valuations.
Futures in Japan, Hong Kong and Australia retreated, though signaling smaller losses than the 3.5% slide in the S&P 500 Index. The Nasdaq Composite sank 5%, its largest decline since June, and futures fell 1%, signaling the retreat could extend for a second day ahead of the August jobs report. Treasury yields dipped and the dollar edged higher, with moves into haven assets muted despite the pronounced drop in equities.
Global equities are pulling back from all-time highs just as the strong recent run up showed signs of broadening into other sectors. Investors are monitoring progress on a vaccine for the pandemic and continued signals of support from central banks and government to support the economy. While data Thursday showed applications for jobless claims fell last week, U.S. investors may need evidence of a fuller economic recovery after a 60% run-up in the S&P 500 since its March lows.
“Given the market’s seemingly relentless climb higher on the back of the mega-cap tech names, it should be no surprise that a pullback was in the offing as the market became increasingly extended and overbought,” said Quincy Krosby, chief market strategist at Prudential Financial Inc. This could be “an overbought market that is burning off froth, following end-of-the-month portfolio adjustments as managers needed to catch up.”
Elsewhere, oil declined. The Cboe Volatility Index -- a measure of expected price swings for the S&P 500 Index known as Wall Street’s “fear gauge” -- rose to the highest level since June. Bitcoin fell as much as 7.6%.
Here are some key events coming up:
U.S. jobs report Friday is forecast to show payrolls continued to rebound in August from virus lows.
Here are the main market moves:
S&P 500 futures slipped 0.6% and Nasdaq 100 contracts were 1.1% lower as of 7:52 a.m. in Tokyo. The index sank 3.5% and the Nasdaq Composite lost 5% on Thursday.
Futures on Japan’s Nikkei 225 declined 1.9%.
Hang Seng futures retreated 1.3%.
Futures on Australia’s S&P/ASX 200 Index fell 1.9%.
The Bloomberg Dollar Spot Index climbed 0.1%.
The euro bought US$1.1845, down 0.1%.
The yen was at 106.19 per dollar.
The offshore yuan traded at 6.8463 per dollar.
The yield on 10-year Treasuries fell two basis points to 0.63%.
Australia’s 10-year yield dropped two basis points to 0.89%.
West Texas Intermediate crude declined 0.5% to US$41.18 a barrel.
Gold was at US$1,931.08 an ounce, little changed.