AP and AFP
HONG KONG–A sell-off of Internet and technology stocks that started on Wall Street spread around the globe on Monday, with tech companies in Asia hammered by worries about excessively high valuations.
Mainstays of the Internet economy such as Google and Netflix that have surged over the past year were hammered on Friday as investors had a change of heart and decided prices were too high. The technology-heavy Nasdaq had its biggest one-day drop since February.
“Perhaps the key equity story now is the horrible price action in the growth stocks, especially ones that trade, or at least did trade, on outrageous valuations,” Chris Weston, chief strategist at IG Markets in Melbourne, wrote in a commentary.
In early European trading, Germany’s DAX sank 1 percent to 9,602.92 and France’s CAC-40 slid 0.5 percent to 4,460.49. Britain’s FTSE 100 lost 0.3 percent to 6,672.31. U.S. stocks were poised to fall. Dow futures shed 0.2 percent to 16,324 and broader S&P 500 futures dropped 0.3 percent to 1,855.40.
Asian benchmarks started the week lower as the pessimism about tech companies proved to be contagious.
Japan’s Nikkei 225 led regional declines, dropping 1.7 percent to close at 14,808.85. Japanese Internet company Softbank Corp. slid 4.6 percent. Yahoo Japan plunged 5.6 percent and e-commerce firm Rakuten Inc. sank 5 percent
South Korea’s KOSPI gained 0.1 percent to close at 1,989.70, with gains coming in the final minutes of trading after spending most of the day in the red. Naver Corp., which owns the Line messaging app, tumbled 6.5 percent, and NCsoft Corp., developer of online games such as Lineage, lost 5 percent.
Hong Kong’s Hang Seng was down 0.6 percent to 22,377.15. Hong Kong-listed shares of China’s Tencent Holdings, which owns the smartphone-based instant messaging service WeChat, fell 4.5 percent. Chinese software maker Kingsoft Corp. slid 6.3 percent.
Australia’s S&P/ASX 200 shed 0.2 percent to 5,413.70 while markets in mainland China were closed for a holiday.
Shanghai and Bangkok were closed for public holidays. Investors this week will be looking ahead to some key releases for further clues on the economic outlook. On Tuesday, they’ll be awaiting a policy statement from the Bank of Japan that may reveal whether the central bank will provide further stimulus. On Wednesday, they’ll be scrutinizing minutes from the Federal Reserve’s policy setting committee.
On Friday the U.S. Labor Department said the world’s number one economy added 192,000 jobs in March — just below forecasts of 195,000 — while the unemployment rate held steady at 6.7 percent. While the figure was an improvement on the past three months when the country was hit by a severe winter, the growth rate is unlikely to alter the pace of the Federal Reserve’s stimulus tapering program. On Wall Street the three main indexes tumbled after notching up strong gains through the week. The Nasdaq plunged 2.60 percent, while the Dow sank 0.96 percent and the S&P 500, which saw two record closes in the week, lost 1.25 percent. Gold fetched US$1,300.91 an ounce at 1040 GMT, up from US$1,292.03 late Friday.