Stocks fell in Asia on Friday after tech companies lowered Wall Street benchmarks as investors weighed the implications of rising interest rates, soaring coronavirus cases and tensions between Beijing and Washington.
Tokyo, Hong Kong, Shanghai fell, but stocks rose in Sydney.
U.S. stocks fell a day after the Federal Reserve said it was preparing to hike rates next year to fight inflation.
Traders were also considering other measures from global central banks. The Bank of England became the first central bank among the major economies to raise interest rates to fight inflation. The European Central Bank is still planning to cut its stimulus measures in the event of a pandemic, but not abruptly.
The Bank of Japan said on Friday it would cut some of its pandemic support measures, reducing corporate bond purchases to pre-crisis levels after March. It also extended additional support for loans to small businesses by six months. But his board meeting also kept ultra-relaxed monetary policy largely unchanged.
“The Japanese economy has picked up as a trend, although it has remained in dire straits due to the impact of COVID-19 at home and abroad,” he said in a statement. He noted the lingering risks associated with the pandemic and supply chain disruptions.
The Japanese central bank’s move was “strikingly in agreement” with other central bank decisions this week, Capital Economics’ Marcel Thieliant said in a comment.
He noted that unlike other large economies, inflation is not a big concern. For years, the BOJ has tried unsuccessfully to achieve an inflation target of 2%.
“The result is that the Bank of Japan will remain among the few central banks that will not tighten their policies for the foreseeable future,” Thieliant said.
Tokyo’s Nikkei 225 index fell 1.8% to 28,545.68, while Seoul’s Kospi recovered from previous losses to gain 0.2%, to 3,012.78. In Australia, the S & P / ASX 200 was up 0.1% to 7,304.00.
Hong Kong’s Hang Seng lost 1% to 23,236.47. The Shanghai Composite index lost 1% to 3,638.03. Tensions between the United States and China were in the spotlight after the United States Congress approved legislation banning all imports from China’s Xinjiang region unless companies can prove they have been produced without forced labor.
It was the latest move to tighten US sanctions against China’s alleged abuses against ethnic and religious minorities in the western region, especially the millions of predominantly Muslim Uyghurs in Xinjiang. The Commerce Department has also imposed new sanctions on the Chinese Academy of Military Medical Sciences and its 11 research institutes that focus on using biotechnology to support the Chinese military.
Thursday’s Wall Street liquidation lowered the S&P 500 0.9% to 4,668.67, wiping out about half of its gains from the previous day. The Nasdaq slipped 2.5% to 15,180.43, its biggest drop since September. The Dow Jones Industrial Average slipped 0.1% to 35,897.64.
Several large tech companies have weighed in on the market. Apple slipped 3.9% and Microsoft fell 2.9%.
Small business stocks also suffered heavy losses. The Russell 2000 index lost 2% to 2,152.46. All major indices are on the verge of posting weekly losses.
The sell-off followed a rally the day before when the Fed announced plans to step up its reduction in monthly bond purchases, which helped keep interest rates low. The policy change paves the way for the Fed to start raising rates next year.
Large tech companies often have high valuations based on assumptions about their long-term profitability. Investors tend to accept these higher valuations more readily when interest rates are extremely low, giving them fewer alternatives for return. As interest rates are set to rise, investors are rethinking the high valuations they are placing on tech giants.
The growing number of Omicron variant coronavirus infections also casts a shadow as public health experts began to call for greater precautions and warn of a wave of worsening COVID-19 outbreaks .
The 10-year Treasury yield fell to 1.42% from 1.43% Thursday night.
In other trading on Friday, US crude oil lost 74 cents to $ 71.64 a barrel in electronic trading on the New York Mercantile Exchange. He earned $ 1.31 to $ 72.38 on Thursday. Brent crude, the basis of international crude pricing, fell 60 cents to $ 74.42.
The US dollar weakened to 113.56 Japanese yen from 113.69 yen. The euro fell from $ 1.1339 to $ 1.1339.