Key facts
- Asian markets opened lower on Monday, following a significant tech stock sell-off on Wall Street.
- The Nasdaq Composite dropped 4.2% on Friday, led by semiconductor stocks.
- Strong U.S. jobs data increased expectations for Federal Reserve interest rate hikes.
- Bitcoin experienced its largest weekly drop since late 2022, falling approximately 16%.
- Geopolitical tensions in the Middle East contributed to rising oil prices.
- SpaceX's IPO is expected to price on Thursday and trade on Friday.
Asian markets opened lower on Monday, mirroring a sharp sell-off in U.S. technology stocks that ended Wall Street's nine-week winning streak. Futures and early trading indicated significant drops for Japan's Nikkei and South Korea's KOSPI, with S&P 500 futures also declining. The Nasdaq Composite fell 4.2% on Friday, led by semiconductor stocks, after a strong U.S. jobs report intensified expectations for Federal Reserve interest rate hikes. Two-year Treasury yields rose more than 11 basis points on Friday and were up 1.6 bps on Monday to 4.1782%. Analysts noted that the market's sensitivity to earnings revisions and potential leveraged ETF unwinding could amplify volatility. Bitcoin experienced its largest weekly drop since late 2022, falling approximately 16% to trade just below $63,000 on Monday. Geopolitical tensions in the Middle East, including Israeli strikes and Iranian missile launches, contributed to rising oil prices, with Brent crude futures increasing about 2.6% to $95.45 a barrel. Brokers expressed nervousness about upcoming large IPOs from companies like SpaceX, Anthropic, and OpenAI, fearing they could draw capital away from other assets. The U.S. dollar remained firm against major currencies, holding above 160 yen and impacting the Australian dollar and euro.
Asian markets extended last week's bruising selloff with high-flying semiconductor stocks taking the heaviest beating and South Korea's KOSPI sinking more than 4.5%. U.S. markets fell sharply on Friday when strong jobs data lifted the odds of a rate hike this year and sent investors scurrying from some of the year's top-performing bets. Analysts noted that extreme market sensitivity to earnings revisions and the potential for leveraged ETF unwinding could amplify volatility. The AI trade narrative frayed last week, with some suggesting the current market movement is a positioning and momentum unwind rather than a reassessment of the long-term AI story. However, some analysts believe semiconductor companies are still making significant profits and the broader economy remains strong, which is not typically a backdrop for a sustained drawdown.