Markets wrap: Asia stocks decline after selloff in U.S. tech shares on likelihood of Fed rate hikes

Stocks in Asia dropped Thursday after a selloff in U.S. technology shares and Treasuries accelerated once Federal Reserve minutes signaled interest-rate hikes may be more aggressive than many had expected.

An MSCI Inc. index of the region’s equities retreated for the third day in four, though declines were more restrained than in New York. U.S. futures fluctuated after the Nasdaq 100 tumbled the most since March as rising Treasury yields added to concerns over growth and profitability. The S&P 500 retreated as traders increased bets U.S. rates will increase at least three times this year. 

The yield on the U.S. 10-year note pared some of its gains. It had climbed to 1.71%, a level not seen since April. Overnight swaps markets moved to price in an 80% chance of a 25 basis-point hike at the Fed’s meeting in March. The dollar was little changed. 

A selloff in Chinese tech companies eased in Hong Kong. Chinese companies listed in the U.S. extended their decline after Tencent Holdings Ltd. cut its stake in an online gaming company, triggering concerns of similar action at other firms amid Beijing’s regulatory crackdown on the sector.

Investors are focusing on tightening monetary policy as concerns persist about the omicron variant’s threat to global growth and company earnings. Fed officials said a strengthening economy and higher inflation could lead to earlier and faster rate increases than expected, with some also favoring moves to shrink the balance sheet soon after.

“We are prepping people for volatility,” Carol Schleif, BMO Family Office deputy chief investment officer said on Bloomberg Television. “You had another record double-digit year and yet investors’ mood is pretty dour. We definitely think the readjustment of the volatility will increase this year because there is a lot to be dealt with. You do have a leveling off of some things, improvement in some things and people are going to be watching both the Fed and company earnings.”

Meanwhile, restrictions are coming back in some places in the face of omicron. Hong Kong reimposed social curbs and halted flights from eight countries, and U.S. school closings are accelerating as case counts soar.

Elsewhere, Bitcoin tumbled to below $43,000, the lowest since its early-December weekend flash crash. Other cryptocurrencies also declined. Oil fell for the first time in four days. The Korean won slipped to the lowest since July 2020. 

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 10:25 a.m. in Tokyo. The S&P 500 fell 1.9%
• Nasdaq 100 futures rose 0.1%. The Nasdaq 100 fell 3.1%
• Topix index fell 1%
• Australia’s S&P/ASX 200 Index fell 1.3%
• Kospi index lost 0.6%
• Hang Seng Index was little changed
• Shanghai Composite Index fell 0.4%

Currencies

• The Japanese yen was at 115.97 per dollar, up 0.1%
• The offshore yuan was at 6.3760 per dollar
• The Bloomberg Dollar Spot Index was little changed
• The euro was at $1.1309

Bonds

• The yield on 10-year Treasuries was at 1.69%, down one basis point
• Australia’s 10-year bond yield rose five basis points to 1.84%

Commodities

• West Texas Intermediate crude fell 0.8% to $77.21 a barrel
• Gold was at $1,809.77