Par Hideyuki Sano
TOKYO (Reuters) – US equity futures and Asian stocks rebounded on Tuesday following a slight rebound in European equities as investors questioned whether high-flying US tech stocks could recover from their recent rout.
The largest MSCI index of Asia-Pacific stocks outside of Japan () rose 0.2% while Japan’s Nikkei () gained 0.4%. US financial markets were closed on Monday for a public holiday while the European STOXX 600 index () was up 1.7%.
Globally Traded US S & P500 Futures
While many market participants say they can’t identify a single trigger for the sudden drop in the Nasdaq, valuations have been stretched after it gained 75% from a low in March.
Tesla (O :), the euphoric poster of major US tech stocks with a 400% gain since the start of the year, looks set to fall after being shut out of a group of companies that s ‘added to the S&P 500.
It lost 6.5% in after-hours trading on Friday and was down 2.7% in Frankfurt (F 🙂 Monday.
“These tech stocks were getting expensive, so I would consider their latest fall as a good correction,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui (NYSE 🙂 DS Asset Management.
Risky assets are also facing headwinds over creeping doubts that U.S. policymakers might not be willing to compile massive stimulus measures as some traders had hoped.
“The key figures in Friday’s US employment data were pretty good, which could lead to speculation. Policymakers may no longer be keen to hand out billions of dollars to support the economy, ”said Masahiko Loo, portfolio manager at AllianceBernstein (NYSE :).
“The markets may have gone too far in expecting the Federal Reserve to announce further easing measures this month,” he said, adding that the decline in expectations was the one of the reasons for the rise in US bond yields last week.
The yield on 10-year US Treasuries stood at 0.716% (), following a five-month low of 0.504% hit in August.
In foreign currencies, the pound fell after the European Union told Britain on Monday that there would be no trade deal if it tried to tinker with the Brexit divorce treaty.
The warning came after the government of British Prime Minister Boris Johnson was planning new legislation to overturn parts of the Brexit withdrawal agreement he signed in January.
The pound lost 0.80% on Monday to $ 1.3167
Other currencies barely budged, as US rate hikes helped stem recent dollar weakness.
The euro eased slightly overnight to $ 1.1818 () while the dollar was little moved at 106.31 yen
Oil prices fell to their lowest level in five weeks after Saudi Arabia made its largest monthly price cuts to supply Asia in five months and uncertainty over Chinese demand obscures recovery of the market.
US WTI futures () fell 1.4% to $ 39.23 per barrel.
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