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Market wrap: Nasdaq 100 rises overnight after a slump in technology stocks
China’s CSI 300 equity gauge plunged more than 3% before bouncing back after state-related funds stepped in to ensure market stability. Nasdaq 100 contracts outperformed as US futures rallied.
Nasdaq 100 futures climbed Tuesday after an overnight slump in technology stocks and Asian shares erased losses as Chinese state-backed funds intervened to alleviate domestic declines. Treasury yields fell.
China’s CSI 300 equity gauge plunged more than 3% before bouncing back after state-related funds stepped in to ensure market stability. Nasdaq 100 contracts outperformed as US futures rallied. The tech gauge tumbled Monday and is now down 11% from a February record. The S&P 500 shed intraday gains as the retreat in high-valuation stocks offset a rise in financial and materials shares.
Elsewhere, the yen weakened beyond 109 per dollar for the first time since June. The 10-year Treasury yield slipped further below 1.6%, with investors watching upcoming auctions to assess the outlook. Asian credit markets slumped as more deals were scrapped on concerns about a spike in rates.
Investors are continuing to shift from costlier growth stocks, such as tech shares, into value and cyclical segments to tap the expected stimulus-fuelled recovery from the pandemic. At the same time, price pressures and rising long-term borrowing costs loom as threats for equities generally, after a prolonged period in which ultra-low rates helped lift markets.
Also read: Inflation rise expectation, long-term borrowing show US markets at risk
“We do believe that at this point we will see gyrations just because the market is pricing in quite a lot of positive news,” said Jun Bei Liu, a portfolio manager at Tribeca Investment Partners. Bond yields are only starting to normalize and the 10-year Treasury yield won’t climb to 2% quickly, she added.
Elsewhere, oil edged higher in Asian trading with the market turning its focus back to the robust outlook. Bitcoin breached the $54,000 level, hitting a two-week high on more signs of institutional interest.
