Tech Selloff Extends in Asia on Inflation Worries

A selloff on Wall Street triggered by investors’ inflation fears and China’s anti-monopoly crackdown sent Asian stocks down particularly tech stocks.

Equity futures dropped in early European trades, with the pan-region Euro Stoxx 50 futures down at 1.35%. London’s FTSE futures fell 1.26% and the German’s DAX dipped 1.24%. In the U.S., the S&P 500 e-minis, slid 0.48%.

MSCI’s broadest index of Asia-Pacific shares outside Japan during afternoon trade plunged to its largest drop since late March, shedding 1.6%. In Japan, the Nikkei slid 3.16%.

Selling was heavy in Hong Kong, with the Hang Seng tech index dropping 3%. It also dragged the broader market down by almost 2%. That followed a 2.55% decline on the Nasdaq overnight.

China’s ongoing anti-monopoly crackdown weighed on the country’s major tech stocks.

Hong Hao, head of research at BoCom International said markets reversed course overnight as inflation fears drove investors away from growth stocks. He also added, notably the tech stocks, to pick cyclicals amid the momentum of the economic recovery.

High prices in commodities are the latest signs that inflation may not be as transitory as some policymakers believe. These prices raised the cost of raw materials from copper to iron ore and lumber so high.

Profit taking dampened commodities but U.S. breakeven rates still scaled multi-year peaks.

Other Stocks on the Move

Australia’s miner-heavy benchmark fell 1.05% while China’s blue-chip CSI300 index climbed 0.45% in afternoon trade. In Hong Kong, tech conglomerates Tencent and Alibaba dipped by more than 3%. 

Food delivery major Meituan has lost more than $30 billion in market value this week, losing as much as 9.8%.

The decline came after China’s top anti-trust regulator statement on Friday. It said it would continue to promote rectification of internet companies.

Investors and traders will not have a better picture of Chinese tech companies and their prospects until Beijing’s antitrust probes finish. This was according to Kelvin Wong, an analyst at CMC Markets.

He further said that Alibaba got the hit first. There’s a bit of ongoing speculation about who’s going to the next one and how big the hit will be, he added.

Pressure on the sector was another factor weighing on the market. Governments look to curtail big tech’s influence and find cash to foot the bill for stimulus spending. This was according to Jim McCafferty, head of equity research in Asia at Nomura.