Most Asian stocks drop following US tech losses

HONG KONG: Most Asian stocks fell after US equities declined on Friday, led by losses in technology shares.

The MSCI Asia Pacific Index snapped a five-day gain as shares slipped in Australia and Japan while they edged up in Hong Kong.

Treasury 10-year yields held near the highest since May after climbing last week, potentially weighing on shares.

Trading is likely to remain slim – amplifying potential moves – due to the year-end holiday season.

“With the sour leads from US equity, we look to start the week on a soft tone to the Asian equity markets,” Chris Weston, head of research for Pepperstone Group, wrote in a client note.

“Local markets are at the mercy of any remaining end-of-year portfolio flows, and the potential for more active managers to reduce risk, sensing limited remaining reasons to chase the tape from here.”

While Asian shares are most lower today, they are still heading for a successful year.

The MSCI Asia Pacific gauge has advanced 7.9% in 2024 as central banks eased monetary policy and tech stocks rallied amid optimism over artificial intelligence.

Today is the last trading day for Japanese financial markets for the year, with public holidays from tomorrow through Jan 6.

Shares of Jeju Air declined 16% in Seoul to the lowest on record, after one of the carrier’s aircraft crashed yesterday, causing the death of all but two of the 181 occupants.

The stock of its parent AK Holdings Inc. fell 12%.

US stock futures edged lower in Asia after the S&P 500 index slipped 1.1% Friday and the Nasdaq 100 dropped 1.4%.

While every major industry group saw losses, tech megacaps bore the brunt of the selling.

That’s after a surge that has seen the so-called “Magnificent Seven” account for more than half of the US equity benchmark’s gains in 2024.

“Santa has already come – have you seen the performance this year?” said Kenny Polcari, a strategist at SlateStone Wealth LLC.

The coming week “is another holiday-shortened week, volumes will be light, moves will be exaggerated. Don’t make any major investing decisions”, he said.

Treasury 10-year yields were little changed today at 4.62%.

The yield jumped 10 basis points last week as the Federal Reserve signalled the likelihood of fewer interest-rate cuts in 2025.

The Bloomberg Dollar Spot Index slipped 0.1% as the greenback edged lower against all its Group-of-10 peers.

The gauge has still gained more than 7% in 2024, driven by the anticipation of “America First” policies from president-elect Donald Trump.

Jimmy Carter, the 39th president of the US died yesterday at his home in Plains, Georgia.

The US stock market has traditionally closed on the day of presidential funerals.

No announcement has been made as of yet by exchange overseers.

High expectations

This year’s rally in US equities has driven the expectations for stocks so high that it may turn out to be the biggest hurdle for further gains in the new year.

The bar is even higher for tech stocks, given their gains in 2024.

Analysts estimate a nearly 30% earnings growth for the tech sector next year, but its market-cap share of the S&P 500 index implies closer to 40% growth expectations may be embedded in the stocks, according to a Bloomberg Intelligence study.

In commodities, oil was little changed in quiet end-of-year trading with the market focused on the outlook for 2025 while monitoring Middle East developments.