Asian Markets Rise Despite Wall Street's Tech Stock Slump
Asian markets, excluding Shanghai, saw gains on Monday, defying the negative sentiment on Wall Street where major tech stocks experienced their worst week since the 2020 COVID crash.
Hong Kong's Hang Seng led the region with a 1.8% increase, reaching 16,516.63. Tokyo's Nikkei 225 followed closely, adding 1% to reach 37,438.61. The yen weakened further, with the U.S. dollar rising to 154.76 yen from 154.59 yen, reaching levels not seen since 1990.
South Korea's Kospi also jumped 1.3% to 2,626.55.
However, the Shanghai Composite index fell 0.4% to 3,051.76 after the People's Bank of China kept its loan prime rates unchanged.
Wall Street's Tech Woes
On Friday, the S&P 500 dropped 0.9%, marking its third consecutive losing week. It ended at 4,967.23, 5.5% below its record high set last month. This is the longest losing streak since September, before the market's record-breaking rally this year.
The Dow Jones Industrial Average rose 0.6% to 37,986.40, while the Nasdaq composite fell 2% to 15,282.01.
Several top-performing tech stocks experienced significant losses. Super Micro Computer plummeted 23.1%, while Nvidia, another recent high-flyer, dropped 10%. Tech stocks in the S&P 500 broadly lost 7.3% this week, their worst performance since March 2020.
The decline was attributed to a growing realization that interest rates may remain high for longer than anticipated. This news is particularly detrimental to tech stocks, which are often seen as expensive and reliant on future growth.
Fed's Stance on Interest Rates
Top Federal Reserve officials indicated this week that interest rates could remain at their current high level for an extended period. This contradicts earlier signals suggesting three potential rate cuts this year.
High interest rates negatively impact various investments, particularly those considered expensive or reliant on future growth, making tech stocks vulnerable.
Fed officials remain focused on seeing concrete evidence of inflation declining towards their 2% target before considering lowering interest rates.
Other Market Movements
Despite the tech slump, American Express and Fifth Third Bancorp rose 6.2% and 5.9%, respectively, after exceeding analysts' expectations for their latest quarterly profits.
In the oil market, U.S. benchmark crude oil shed 92 cents to $81.30 per barrel, while Brent crude gave up 95 cents to $86.35 per barrel.