Asian Stocks Dip as Tech Jitters Resurface; Bonds Surge
Asian stock markets experienced a decline as concerns over the tech sector resurfaced. This downturn prompted many investors to shift their focus to safe-haven bonds ahead of significant U.S. inflation data.
Market Overview
On February 13, 2023, shares across Asia struggled, led by a notable drop in Japan’s Nikkei index, which fell by 1.3%. Despite this decline, the Nikkei still recorded a weekly gain of nearly 5%.
- MSCI’s index for Asia-Pacific shares, excluding Japan, decreased by 1.1%, bringing its weekly increase down to 3.7%.
- The Hang Seng index in Hong Kong declined by 2.1%, while Chinese blue chips dropped by 0.9%.
- Wall Street futures for the Nasdaq and S&P 500 dipped by 0.2% each.
Tech Sector Challenges
The tech sector faced renewed pressure as Cisco Systems reported quarterly earnings that fell short of expectations. The company’s adjusted gross margin decreased due to soaring memory chip costs, leading to a 12% drop in its shares—a decrease that wiped out approximately $40 billion in market capitalization.
Apple was similarly impacted, with its stock tumbling by 5%, marking its largest single-day decline since April of the previous year. Analysts indicated that the current market sentiment reflects a defensive shift towards companies with more stable earnings in light of mounting concerns over artificial intelligence disruptions.
Investor Focus on Bonds and Inflation
The selloff in equities drove an influx of buyers into U.S. Treasury bonds. The yield on the benchmark 10-year note dropped 7 basis points, reaching 4.1134%. This was the most significant decline in yields since October 2022, bolstered by a successful auction of 30-year bonds, which brought yields down to their lowest levels since early December 2022.
Market participants are particularly eyeing U.S. inflation data set to be released later today. Current forecasts project a monthly increase of 0.3% in the core inflation measure, potentially bringing the annual rate down from 2.7% to 2.5%.
Currency and Commodity Movements
In the currency market, the Australian and New Zealand dollars retraced losses, with the Australian dollar falling by 0.2% to $0.7071 and the New Zealand dollar easing by 0.1% to $0.6029.
Precious metals made a slight recovery after significant losses in the previous session. Gold prices ascended by 1.3% to $4,984 per ounce, while silver climbed 2.5% to $77.00 per ounce, recovering from a steep decline of 10% earlier.
Oil prices, however, continued to experience declines. U.S. West Texas Intermediate crude slipped 0.3% to $62.66 per barrel, with Brent futures falling by 0.2% to $67.37. These movements come amid rising geopolitical tensions in the Middle East.
Looking Ahead
As investors await the U.S. inflation report, market dynamics may shift significantly depending on the results. Economists suggest any positive news could rejuvenate investor sentiment and energize trading in cyclical sectors.
