Stock Selloff Moderates in Asia, Futures Pare Loss: Markets Wrap
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(Bloomberg) -- Asian stocks were poised to track US losses that dragged the Nasdaq 100 to its worst day since 2022, as anxiety mounts that tariffs and government firings will torpedo growth in the world’s largest economy.
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Futures showed equity benchmarks in Japan and Hong Kong were set to tumble around 1.8%, while shares on Shanghai and Sydney would also slide, extending a three-week stretch of volatility across global markets. American stocks got hammered as Wall Street tempered bullish views while demand for recession havens boosted sovereign bonds.
A selloff in the S&P 500’s most influential group — big tech — weighed heavily on trading, sending the index within striking distance of a correction. A gauge of the Magnificent Seven megacaps tumbled 5.4%. Treasury yields slid on bets that an economic slowdown would force the Federal Reserve to slash interest rates. Bitcoin slipped below $80,000.
Speculation is intensifying that President Donald Trump is willing to tolerate hardship in the economy and markets in pursuit of long-term goals involving tariffs and smaller government. Asked on Fox News’ Sunday Morning Futures whether he’s expecting a recession, he said, “I hate to predict things like that. There is a period of transition, because what we’re doing is very big.”
“We’ve gone from animal spirits to what are the odds of a recession,” said Gina Bolvin, president of Bolvin Wealth Management Group. “This is a headline-driven market; one that could change in an hour. Sit tight. Buckle up. We finally have the correction we were waiting for, and long-term investors will be rewarded again.”
Traders also kept a close eye on something that hasn’t happened with the S&P 500 since November 2023 - a close below the key 200-day moving average.
“There’s a saying on Wall Street about how nothing good happens below the 200-day moving average,” said Callie Cox at Ritholtz Wealth Management. “Honestly, out of all the crazy sayings that come out of this industry, it’s one you should take seriously. Selloffs accelerate and swings get dramatically bigger in the danger zone – or the space below the 200-day moving average.”
The S&P 500 dropped 2.7%. The Nasdaq 100 lost 3.8%. In the megacap space, Tesla Inc. sank 15% while Nvidia Corp. drove a closely watched gauge of chipmakers to the lowest since April. The Dow Jones Industrial Average lost 2.1%.
The yield on 10-year Treasuries slid nine basis points to 4.21%. The dollar rose 0.2%. About 10 high-grade companies delayed US bond sales on Monday. Oil fell to a six-month low.
Despite the global risk-off mood, mainland Chinese investors bought an unprecedented amount of Hong Kong stocks on Monday, continuing to boost their holdings amid a tech-driven rally this year. The stocks have been on a tear this year, thanks to the emergence of an artificial-intelligence model from startup DeepSeek that was considered a game-changer in the industry.
The latest turmoil on Wall Street marks an abrupt about-face for markets, where the dominant driver of the last few years had been the surprising resilience of the US economy even as growth weakened overseas. That’s shaking the aura of economic and market exceptionalism that has dominated for more than a decade.
“This is a period of high uncertainty on a global macro scale - and as a result, we continue to see de-risking in US stocks,” said Dan Wantrobski at Janney Montgomery Scott. “Added to the potential geopolitical disruptors are the ongoing narratives of inflation, growth, and now potential recession (exacerbated by tariff wars) in the US.”
The talk of tariffs is in a lot of ways worse than the implementation of them, according to David Bahnsen, chief investment officer at The Bahnsen Group.
“I do not believe the administration knows how the tariff situation will play out, but if I were a betting man, I would say that it will persist long enough to do damage to economic activity for at least a quarter or two, and ultimately result in a deal with different countries that make everyone wonder why we went through all the fuss,” Bahnsen said.
He also noted that if a tax cut extension and further tax reform bill is passed through budget reconciliation sooner than later, that will help “offset the damage.”
The talk of tariffs is in a lot of ways worse than the implementation of them, according to David Bahnsen, chief investment officer at The Bahnsen Group.
“I do not believe the administration knows how the tariff situation will play out, but if I were a betting man, I would say that it will persist long enough to do damage to economic activity for at least a quarter or two, and ultimately result in a deal with different countries that make everyone wonder why we went through all the fuss,” Bahnsen said.
He also noted that if a tax cut extension and further tax reform bill is passed through budget reconciliation sooner than later, that will help “offset the damage.”
Key events this week:
Japan GDP, household spending, money stock, Tuesday
US job openings, Tuesday
Canada rate decision, Wednesday
US CPI, Wednesday
Eurozone industrial production, Thursday
US PPI, initial jobless claims, Thursday
US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
Hang Seng futures fell 1.8% as of 7:26 a.m. Tokyo time
S&P/ASX 200 futures fell 0.9%
Hang Seng futures fell 1.8%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro was little changed at $1.0836
The Japanese yen rose 0.2% to 147.04 per dollar
The offshore yuan was little changed at 7.2635 per dollar
Cryptocurrencies
Bitcoin was little changed at $79,295.96
Ether rose 0.2% to $1,872.48
Bonds
The yield on 10-year Treasuries declined nine basis points to 4.21%
Australia’s 10-year yield declined six basis points to 4.37%
This story was produced with the assistance of Bloomberg Automation.
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