World Shares Skid on Friday 02/26 05:22
Shares skidded Friday in Europe and Asia but U.S. futures turned higher
after a rout in technology companies pulled the Nasdaq 3.5% lower in the
steepest loss for the tech-heavy index since October.
BANGKOK (AP) -- Shares skidded Friday in Europe and Asia but U.S. futures
turned higher after a rout in technology companies pulled the Nasdaq 3.5% lower
in the steepest loss for the tech-heavy index since October.
Tokyo's Nikkei 225 index, which recently surpassed 30-year highs, sank 4% to
28,966.01. But European shares opened only modestly lower.
The sell-off Thursday on Wall Street picked up speed when the yield on the
10-year U.S. Treasury note exceeded 1.5%, a level not seen in more than a year
and far above the 0.92% it was trading at only two months ago. That move raised
the alarm that yields, and the interest rates they influence, will move higher
Early Friday, the yield on the 10-year U.S. Treasury note was 1.46%.
The recent rise in bond yields reflects growing confidence that the economy
is on the path to recovery, but also expectations that inflation is headed
higher, which might prompt central banks eventually to raise interest rates to
cool price hikes. Rising yields can make stocks look less attractive relative
to bonds for some investors, which is why every tick up in yields has
corresponded with a tick down in stock prices.
In the past, worries over a possible tapering off of the massive amounts of
cash central banks have been pumping into economies have triggered sell-offs in
what some call a "taper tantrum."
Federal Reserve Chair Jerome Powell has affirmed the Fed's commitment to low
interest rates in testimony to legislators in Washington this week. Asian and
European central banks also have insisted they are committed to supporting
economies for the long haul. But still, investors are jumpy.
"It seems like traders and investors aren't listening to official
policymakers, and they have set their minds on one thing: interest rates will
increase sooner than later," Naeem Aslam of Avatrade.com said in a commentary.
"Another reality about the stock market is also that the massive stock rally
that we have experienced so far seems to have run out of steam," Aslam said.
Germany's DAX gave up 0.4% to 13,828.28 and the CAC 40 lost 0.7% to
5,741.14. Britain's FTSE 100 edged 0.2% lower to 6,639.64. The future contract
for the S&P 500 rose 0.5%, to 3,846.70 while the future for the Dow industrials
inched 0.2% higher, to 31,423.00.
In other Asian trading, the Hang Seng in Hong Kong sagged 3.6% to 28,980.21.
The Shanghai Composite index shed 2.1% to 3,509.08. South Korea's Kospi
declined 2.8% to 3,012.95. The S&P/ASX 200 slipped 2.4% to 6,673.30. India's
Sensex gave up 3% to 49,522.08.
On Thursday, the S&P 500 index fell % to 3,829.34. The Dow Jones Industrial
Average lost 1.8%, to 31,402.01. The tech-heavy Nasdaq slid 478.54 points to
13,119.43: technology stocks, which tend to have higher valuations, are taking
the brunt of selling as investors pursue higher yields from bonds.
Smaller company stocks fared even worse, with the Russell 2000 index of
smaller company stocks down 3.7% to 2,200.17.
Expectations for stronger growth were reinforced by news that t he U.S.
economy grew at an annual pace of 4.1% in the final three months of 2020,
slightly faster than first estimated. Higher government spending and
accelerated vaccine distribution could lift growth in the current quarter,
ending in March, to 5% or even higher, economists believe.
Economies in Asia are also on the mend, though rollouts of vaccines lag
behind the U.S. effort and pandemic-related travel restrictions and quarantine
requirements are still in effect for many countries.
In other trading Friday, U.S. benchmark crude oil shed 74 cents to $62.79
per barrel in electronic trading on the New York Mercantile Exchange. It gained
31 cents to $53.22 per barrel on Thursday. Brent crude, the international
standard, gave up 76 cents to $65.35 per barrel.
The dollar fell to 106.11 Japanese yen from 106.20 yen on Thursday. The euro
slipped to $1.2144 from $1.2177.