Asian shares on the back foot amid heady valuations
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Sydney — Asian shares were on the defensive on Monday as investors grappled with sky-high valuations against the backdrop of a global economy in the grip of a deep coronavirus-induced recession while oil prices dropped sharply.
Chinese stocks started lower while shares of Hong Kong-listed Semiconductor Manufacturing International Corp (SMIC) plunged to the lowest since June 16 on fears the company could be added to a US trade blacklist.
China’s blue-chip index slipped 0.3%.
Japan’s Nikkei fell 0.2% with SoftBank coming under heavy selling after media reports it has spent at least $4bn buying call options on listed US technology stocks.
Australian shares, which had opened in the red, reversed losses to be up 0.1, while South Korea added 0.7%.
That left MSCI’s broadest index of Asia-Pacific shares outside Japan up a tad after two consecutive days of losses toppled it from a 21⁄2-year peak last week.
World shares hit a record high last week as central bank stimulus drove asset valuations to heady levels. The rally has since cooled as tech stocks sold off while worries over patchy economic recovery dogged investors.
Also weighing on the outlook, data showed China imports fell 2.1% in August from a year earlier, confounding expectations for a 0.1% increase, in a sign of sluggish domestic demand. Exports jumped by a larger-than-expected 9.5%.
Tesla exclusion
E-Mini futures for the S&P 500 slipped 0.1% and Nasdaq futures slid 0.7%. US markets will be closed on Monday for the Labour Day holiday.
Nasdaq futures were dragged lower by the exclusion of Tesla from a group of companies that are being added to the S&P 500.
Analysts at Jefferies expect the equities market correction to extend further.
“Our risk indices have begun to turn from their euphoria highs,” Jefferies said.
“It is not unthinkable that global equities are set to churn in a range for a while as some of the orphan sectors and countries are refranchised while the richly valued sectors pause or unwind,” it added.
“On the balance of probabilities, last week’s correction has further room to go.”
Jefferies said it is switching its weighting on MSCI All World index to “tactically bearish” in the short term.
It noted that a gauge of volatility has nudged higher in the past three months alongside a steepening in the US 10-year to five-year Treasury yield curve as well as the 30-year to five-year curve.
“We wonder how ...
Chinese stocks started lower while shares of Hong Kong-listed Semiconductor Manufacturing International Corp (SMIC) plunged to the lowest since June 16 on fears the company could be added to a US trade blacklist.
China’s blue-chip index slipped 0.3%.
Japan’s Nikkei fell 0.2% with SoftBank coming under heavy selling after media reports it has spent at least $4bn buying call options on listed US technology stocks.
Australian shares, which had opened in the red, reversed losses to be up 0.1, while South Korea added 0.7%.
That left MSCI’s broadest index of Asia-Pacific shares outside Japan up a tad after two consecutive days of losses toppled it from a 21⁄2-year peak last week.
World shares hit a record high last week as central bank stimulus drove asset valuations to heady levels. The rally has since cooled as tech stocks sold off while worries over patchy economic recovery dogged investors.
Also weighing on the outlook, data showed China imports fell 2.1% in August from a year earlier, confounding expectations for a 0.1% increase, in a sign of sluggish domestic demand. Exports jumped by a larger-than-expected 9.5%.
Tesla exclusion
E-Mini futures for the S&P 500 slipped 0.1% and Nasdaq futures slid 0.7%. US markets will be closed on Monday for the Labour Day holiday.
Nasdaq futures were dragged lower by the exclusion of Tesla from a group of companies that are being added to the S&P 500.
Analysts at Jefferies expect the equities market correction to extend further.
“Our risk indices have begun to turn from their euphoria highs,” Jefferies said.
“It is not unthinkable that global equities are set to churn in a range for a while as some of the orphan sectors and countries are refranchised while the richly valued sectors pause or unwind,” it added.
“On the balance of probabilities, last week’s correction has further room to go.”
Jefferies said it is switching its weighting on MSCI All World index to “tactically bearish” in the short term.
It noted that a gauge of volatility has nudged higher in the past three months alongside a steepening in the US 10-year to five-year Treasury yield curve as well as the 30-year to five-year curve.
“We wonder how ...