Asian Markets Tumble as Tech Stocks Slump
Global tech stocks took a beating on Thursday, sending investors scrambling for safer assets like short-term bonds, the yen, and the Swiss franc. This triggered a sell-off in Asian shares, with MSCI's broadest index of Asia-Pacific shares outside Japan losing 0.7%. Japan's Nikkei tumbled 2.9%, and South Korea's KOSPI dropped 2%.
The slump in tech stocks followed lackluster earnings reports from Alphabet and Tesla, undermining investor confidence in the already lofty valuations of the "Magnificent Seven" stocks. This added to recent market volatility, with Wall Street's fear gauge jumping to a three-month high.
Chinese Stimulus Fails to Impress
China's central bank surprised markets with a cut in longer-term rates, adding to a recent rush of stimulus measures. However, this failed to provide much support for Chinese stocks, with the Shanghai Composite index still off 0.3% and hitting five-month lows.
Safe Havens in Demand
Investors sought the safety of cash and super-liquid short-term debt, with U.S. two-year yields hitting their lowest in almost six months on Wednesday. The other big mover in Asia was the safe-haven yen, up 0.6% to the strongest in 2-1/2 months.
Rate Cut Bets Rise
The sell-off in stocks saw investors ramp up bets on rate cuts globally, with futures implying a 100% chance of a Federal Reserve easing in September. Markets are fully pricing in a quarter-point rate cut from the Fed in September, with even some risk for a 50 basis point cut.
Economic Data Ahead
Advance U.S. gross domestic product data is due later on Thursday and is forecast to show growth picking up to an annualized 2% in the second quarter. The closely watched Atlanta Fed GDPNow indicator points to growth of 2.6%, suggesting some risk to the upside.
Commodities Slide
Gold fell 0.9% to $2,375.92 an ounce, while oil prices ticked lower and held near six-week lows on worries about a slowing Chinese economy crimping demand.