Asian markets outside Shanghai were mostly higher on Monday, shaking off a gloomy mood on Wall Street after big tech stocks had their worst week since the 2020 coronavirus crash.
Oil prices fell, but US futures rose.
Hong Kong’s Hang Seng rose 1.8% to 16,516.63, leading the region. However, the Shanghai Composite Index fell 0.4% to 3,051.76 after the People’s Bank of China left the one-year and five-year loan prime rates unchanged.
Tokyo’s Nikkei Stock Average rose 1% to 37,438.61 yen, with the yen depreciating further. The dollar rose to 154.76 yen from 154.59 yen, trading at a level not seen since 1990.
South Korea’s Kospi rose 1.3% to 2,626.55.
Australia’s S&P/ASX 200 rose 0.9% to 7,638.30.
On Friday, the S&P 500 fell 0.9%, ending a three-week losing streak. It closed at 4,967.23, 5.5% below the record set late last month.
This is the longest run since September, before falling into a record-setting frenzy this year.
The Dow Jones Industrial Average rose 0.6% to $37,986.40, while the Nasdaq Composite Index fell 2% to $15,282.01.
The market’s worst-performing stocks included some of the biggest stars of the past. Supermicrocomputers lost more than a fifth of their value, falling 23.1%. The company, which sells servers and storage systems used in AI and other computing, had soared nearly 227% in the year to date.
Nvidia, another stock that soared to dizzying heights due to Wall Street’s enthusiasm for artificial intelligence technology, also gave up some of its recent big gains. Due to its sheer size, it fell 10%, making it the heaviest single weight in the S&P 500 ever.
Tech stocks in the S&P 500 collectively fell 7.3% this week, their worst performance since March 2020, as some of the world’s largest companies reported disappointing trends. For example, Dutch company ASML, a major supplier to the semiconductor industry, reported lower than expected orders for early 2024.
The bigger threat was the dawning realization sweeping Wall Street that interest rates were likely to remain high.
Fed officials said this week that they may keep interest rates high for some time. This was a disappointment for traders after the Fed had earlier indicated it could cut interest rates three times this year.
High interest rates reduce the price of all types of investments. Stocks considered to be the most expensive tend to be hit hardest, leaving investors to wait the longest for big growth, potentially making tech stocks vulnerable.
Fed officials have insisted they want more confirmation that inflation is falling toward their 2% target before lowering the central bank’s key interest rate, which is at its highest level since 2001.
Companies are under additional pressure to deliver profit growth, as interest rates are unlikely to be very helpful in the short term.
Netflix fell 9.1% despite reporting better-than-expected profits in its latest quarter. Although analysts called the results mostly solid, the streaming giant disappointed some investors by announcing it would stop providing subscriber count updates every three months starting next year.
Helping to limit market losses was American Express, which rose 6.2%. The company reported that its latest quarterly profit was better than analysts expected. Fifth Third Bancorp similarly beat market expectations, rising 5.9%.
In the oil market, benchmark US crude oil fell 92 cents to $81.30 per barrel in electronic trading on the New York Mercantile Exchange. It rose 12 cents on Friday to $82.22 a barrel.
A barrel of Brent crude oil fell 95 cents to $86.35 per barrel. Concerns about fighting in the Middle East briefly caused the price to rise above $90 overnight, but the price had returned to $87.29 on Friday. Iran’s military fired air defenses at key air bases and nuclear facilities in response to drone attacks believed to be carried out by Israel, raising concerns in the market. But oil prices pared their gains as traders wondered how Iran would respond.
