TOKYO – (AP) – Asian stocks fell on Wednesday, following a decline on Wall Street led by big tech stocks. Investors are awaiting release of the minutes from the Federal Reserve’s latest policy meeting.
Japan’s benchmark Nikkei 225 fell 1.4% in the morning session to 28,008.09. The Australian S & P / ASX 200 slipped 1.9% to 6,936.00. The Shanghai Composite Index slipped 0.4% to 3,513.61. Markets were closed in Hong Kong and South Korea.
“Major US markets ended the day lower as investors took some risk in the markets ahead of the Fed’s release a few minutes later today,” said Yeap Jun Rong, market strategist at IG in Singapore. . “Asian markets should follow the drop in US indices.”
A day after Japan announced that its economy had contracted at an annual rate of 5.1% in the first quarter of this year, Fitch Solutions predicted that the economy will grow 2.5% this year, highlighting the challenge. as the country battles the surge in coronavirus infections.
“The slow rollout of immunization in the country means the country continues to face risks from sporadic movement restrictions and other tightening measures that will disrupt a healthy resumption of activity,” the report said. .
The Tokyo Olympics, due to start in late July, will be held in such a reduced capacity that “the positive economic gains from the event will likely be negligible,” he said.
Stocks closed lower on Wall Street as a late-afternoon sell-off in tech companies helped push stock indexes into the red for a second straight day.
The S&P 500 lost 0.9% to 4,127.83, with most of the pullback occurring in the last hour of trading. Apple, Facebook, and Google’s parent company all lost 1% or more, as tech stocks fell overall. Although they fueled the market rebound last year, tech stocks only rose 2.6% this year, the lowest gain among the 11 sectors in the S&P 500.
Banks, industrial and communications companies also helped push the market down, easily offsetting weak gains in health care stocks, among others. Investors continued to rate the company’s latest batch of earnings reports, including quarterly snapshots from Walmart and Home Depot.
“Equities appear to be in consolidation mode, digesting strong year-to-date gains on the heels of a superb Q1 reporting period,” said Terry Sandven, chief equity strategist at US Bank Wealth Management.
“We see this pullback that we are experiencing over the last week or so as part of the normal ebb and flow of a large market that still has legs to move up.”
The Dow Jones Industrial Average fell 0.8% to 34,060.66. The highly technological Nasdaq fell 0.6% to 13,303.64. The Russell 2000 index of small business stocks fell 0.7% to 2,210.88.
The market as a whole made strong gains at the start of the year, with investors betting on an economic recovery fueled by widespread vaccinations. Expectations for corporate earnings were high and the latest round of results has been surprisingly good. Wall Street is now digesting this growth and adopting a more cautious view.
“Some kind of pause was always inevitable,” said Ross Mayfield, investment strategist at Baird. “Ultimately, the markets see a more difficult landscape ahead and general uncertainty.”
A big question is whether rising inflation will be temporary or if it will last. Prices are on the rise for everything from gasoline to food, as the economy recovers from its unease that has lasted for more than a year.
The fear is that the Federal Reserve will have to push back its significant support if inflation persists. This includes historically low interest rates and the monthly purchase of $ 120 billion of bonds intended to fuel the labor market and the economy. Despite all the concerns about inflation, however, many professional investors echo the Federal Reserve in saying that they expect the price increase to be “transient.”
Higher interest rates weigh on most of the stock market, but they are particularly painful for stocks, especially tech stocks, considered the most expensive and those that bid for expected earnings in the distant future. .
Retailers are among the latest companies to release their first quarter results, and several are expected to do so this week, including Target and Lowe’s.
Walmart rose 2.2% on Tuesday after the retail giant’s results beat estimates as online shopping jumped from a year earlier.
AT&T fell 5.8% for the biggest decline in the S&P 500 and continued its two-day decline after the company announced it would divest its Warner media assets into a new company with Discovery Communications.
In energy trading, US benchmark crude fell 79 cents to $ 64.70 a barrel in electronic trading on the New York Mercantile Exchange. It lost 78 cents to $ 65.49 on Tuesday. Brent crude, the international standard, fell 67 cents to $ 68.04 a barrel.
In currency trading, the US dollar edged up to 108.97 Japanese yen from 108.89 yen. The euro slipped to $ 1.2224 from $ 1.2226.
Damian J. Troise and Alex Veiga, Editors of AP Business, contributed.