By Echo Wang
MIAMI (Reuters) – Asian equities opened lower on Wednesday on concerns about rising interest rates and rich equity valuations and following a downdraft in U.S. and European overnight trading.
The Dow and recouped early losses after Federal Reserve Chair Jerome Powell reiterated in testimony before the Senate Banking Committee that monetary policy would remain accommodative and would not change without advance warning.
The tech-heavy closed down 0.5% as investors sold the big tech stocks that have driven the market rally since last March, and rotated into cyclicals, helping lift the Dow and S&P 500.
But Powell’s testimony hasn’t fully swept away fears of rising inflation as the economies around the world are expected to rebound this year more strongly than was expected just weeks go as vaccines roll out around the world.
“Despite reassuring words from Mr Powell markets know that if the U.S. inflation … hits over 2%, then the Fed will have difficulty in maintaining its support for economies and markets”, said Michael McCarthy, Chief Markets Strategist at CMC Markets in Sydney.
In early Asia trade, Australia’s was down 0.5%, South Korea’s shed 0.4% while 225 was down 0.9%. Hong Kong’s futures were down 0.37%.
U.S. tech stocks fell as investors sold recent winners to rotate into assets that are expected to do well in an improving economy. The tech-heavy Nasdaq dropped 0.5% while in Europe tech stocks posted their worst two-day decline in four months, falling 3.7%.
Tesla (NASDAQ:) Inc lost 2.2% to close in negative territory for the year, pulled down amid the tech selloff and falling bitcoin, which lost 12%. Tesla recently invested $1.5 billion in the cryptocurrency.
The rose 15.66 points, or 0.05%, to 31,537.35, the S&P 500 gained 4.87 points, or 0.13%, to 3,881.37.
added 0.1% to $1,806.25 an ounce.
The fell 0.037%, with the euro up 0.04% to $1.2154.
settled down 3 cents to $61.67 a barrel on Tuesday, still close to its highest levels since January 2020. settled up 13 cents, or 0.2%, to $65.37 a barrel.
The 10-year U.S. Treasury note was down 1.4 basis point at 1.3551% in late U.S. trade. It touched a high of 1.389% early Tuesday before Powell’s testimony.
The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was little changed at 0.1169%.