The Nasdaq 100 Index dipped 3.1% and the S&P 500 Index dropped 1.5%
Asian stocks weakened after U.S. shares fell from a record, oil slumped and Treasury yields touched the highest levels in more than a year as the Federal Reserve’s tolerant stance on inflation unnerved investors.
Crude prices extended Thursday’s decline of over 7%, partly due to concerns that new virus-related curbs in Europe will reduce demand. U.S. Treasury yields steadied after a rise led the 10-year benchmark to 1.75% for the first time since January 2020. The dollar held its advance from the previous day.
Shares opened lower in Japan, South Korea and Australia. U.S. futures inched higher, however, after a bruising session in which rising yields dented demand for technology shares. The Nasdaq 100 Index dipped 3.1% and the S&P 500 Index dropped 1.5%.
Traders were also bracing for quadruple witching Friday, a major expiration of options and futures contracts that can add to swings in asset prices.
Fed Chairman Jerome Powell’s willingness to let the economy run hotter with central bank support has spurred bets on faster inflation, sending market expectations of price pressures to multi-year highs.
Across the Atlantic, France announced a lockdown of regions including Paris to tackle the Covid crisis, raising fresh doubts about the speed of Europe’s recovery as the region struggles to roll out vaccines.
Economic recovery is on its way and we have central banks around the world very committed to easy monetary policy, said Jun Bei Liu, portfolio manager at Tribeca Investment Partners, who sees value stocks benefiting in the recovery. All of that together will indicate this is just short-term profit-taking and the underlying fundamentals of the equity market are looking very strong.
Japan central bank’s decision is likely to draw attention amid speculation that policy makers may adjust their bond-yield target range and asset purchases following a policy review that could have significant implications for investors.
The Bank of Japan has a monetary policy decision scheduled Friday, with a briefing from Governor Haruhiko Kuroda.
Elsewhere, a number of European nations will start using AstraZeneca Plc’s Covid-19 vaccine again after the EU’s drug regulator endorsed it as safe.
In Alaska, senior U.S. and Chinese officials began their first talks since Joe Biden became president.
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