Key facts
- Asian markets are expected to open lower on Monday.
- Wall Street's nine-week winning streak ended Friday with heavy tech stock selling.
- The Nasdaq Composite dropped 4.2% on Friday, with semiconductor stocks leading the decline.
- Hotter-than-expected U.S. jobs data fueled expectations of Federal Reserve interest rate hikes.
- Two-year Treasury yields rose significantly on Friday.
- Bitcoin experienced its largest weekly drop since late 2022, falling approximately 16%.
Asian markets were expected to decline on Monday, following a significant tech-driven sell-off on Wall Street that ended a nine-week rally. Futures and exchange-traded fund movements indicated sharp drops for Japan and South Korea, with S&P 500 futures also down in early Asian trading.
The Nasdaq Composite fell 4.2% on Friday, with semiconductor stocks bearing the brunt of the selling. This downturn was attributed to a strong U.S. jobs report that intensified expectations for Federal Reserve interest rate hikes, halting a rally previously fueled by artificial intelligence-related stocks.
Two-year Treasury yields increased by more than 11 basis points on Friday, and benchmark 10-year Treasury futures saw a slight decrease early Monday. Analysts noted that the "AI-drives-everything" narrative appeared to falter last week, raising questions about whether the equity rally was merely pausing or reaching a peak.
The upcoming week features the highly anticipated SpaceX IPO, scheduled to price on Thursday and trade on Friday. Inflation data, including U.S. consumer price figures due Wednesday, and central bank meetings in Canada and Europe are also on the economic calendar.
In the cryptocurrency market, Bitcoin experienced its heaviest weekly drop since the collapse of FTX in late 2022, falling approximately 16%. It was trading just below $63,000 on Monday.
Brokers expressed nervousness about the potential impact of upcoming mega IPOs from SpaceX, Anthropic, and OpenAI, fearing they could draw capital away from other assets.
The geopolitical situation in the Middle East also contributed to market sentiment. Brent crude futures rose about 2.6% to $95.45 a barrel on Monday morning following an Israeli attack on Beirut, which prompted Iran to launch missiles at Israeli targets. OPEC+ agreed on Sunday to its fourth oil output target increase in as many months.
In currency markets, the U.S. dollar remained firm, holding above 160 yen and pushing the Australian dollar to $0.7038. The euro was trading around $1.1518.