Asia shares step back from record, tech jitters return
Asian stocks retreated from record highs on Friday as concerns about narrowing margins in the technology sector hit markets such as Apple and sent investors into safe-haven bonds ahead of US inflation data.
Overnight on Wall Street, the tech-heavy Nasdaq Composite fell 2.0 percent after Cisco Systems reported quarterly adjusted gross margin below estimates due to a rise in the cost of memory chips. This caused its shares to fall 12 per cent, wiping out nearly US$40 billion ($A56 billion) of its market value.
The sales also spread to technology giants such as Apple, with Apple falling 5.0 percent, its biggest daily decline since April last year, when US President Donald Trump’s sweeping “Liberation Day” tariffs frightened the markets. Transportation companies have also become concerned about AI disruption.
“The prevailing sentiment in markets is a rotation towards more defensive areas of the equity market and companies with stable, less cyclical and more predictable earnings,” said Chris Weston, head of research at Pepperstone.
“It is clear that investors are viewing developments in AI and AGI through a new lens and trying to price in a future that is more uncertain and structurally disruptive than before.”
On Friday, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6 percent, trimming this week’s gain to 4.1 percent. Japan’s Nikkei index lost 0.9 percent but was still up 5.3 percent for the week.
Chinese blue chips fell 0.6 percent, while Hong Kong’s Hang Seng index fell 1.5 percent.
Nasdaq futures and S&P 500 rose 0.1 percent, while EURO STOXX 50 futures rose 0.2 percent.
Precious metals are trying to recover after heavy losses. Gold rose 1.0 per cent to US$4,972 ($A7,008) per ounce after losing more than 3.0 per cent on Thursday, while silver rose 2.0 per cent to US$76.8 ($A108.2) per ounce, falling 10 per cent overnight.
A broad sell-off in stocks pushed buyers into U.S. Treasuries, with the yield on the benchmark 10-year bond falling seven basis points overnight, its biggest drop since Oct. 10. At the beginning of Friday, trading remained steady at 4.1154 percent.
A very strong auction of 30-year bonds helped lower long-term yields. 30-year bond yields fell 8.5 basis points overnight to 4.728 percent, the lowest level since December 3.
Fed funds futures also rebounded to reverse most of their losses following employment data that caused markets to discount the chances of a rate cut in June. A move in June is now back in play, the chance is priced at 70 percent, and a total easing of 60 basis points is expected this year.
Later in the day, attention will be on US inflation data. Forecasts focus on a 0.3 percent monthly increase in the core metric; This is enough to see the annual rate slow to 2.5 percent from the previous 2.7 percent.
“Even a flat outcome could reflect a meaningful slowdown since December, which could lift animal spirits and re-energize cyclical trading,” said Jose Torres, senior economist at Interactive Brokers.
In foreign exchange markets, the risk-sensitive Australian and New Zealand dollars took a step back. The Australian Dollar was steady at US$0.7089 (A$A0.9992), losing 0.5 per cent overnight, while the kiwi was trading at US$0.6033 (A$A0.8503), after falling 0.3 per cent overnight.
Oil prices were flat after falling sharply by 3.0 percent overnight as falling demand, renewed conflict in the Middle East and fears of an expected increase in supply eased.
US West Texas Intermediate crude rose 0.2 per cent to US$62.95 (A$A88.72) per barrel, while Brent crude futures rose 0.2 per cent to US$67.65 (A$A95.35) per barrel.
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