SYDNEY – Asian stocks retreated from record highs on Friday as concerns about shrinking margins in the technology sector weighed on companies such as Apple and investors poured into safe-haven bonds ahead of key U.S. inflation data.
On Wall Street, the technology-heavy Nasdaq Composite Index fell 2% after Cisco Systems Inc. reported lower-than-expected quarterly adjusted gross profit margins due to soaring costs for memory chips. As a result, the company’s stock price fell 12%, wiping out about $40 billion in market capitalization.
The sell-off spilled over into tech giants like Apple, which suffered the biggest one-day drop of 5% since last April, when President Donald Trump’s sweeping “Emancipation Day” tariffs spooked markets. Transportation companies are also caught up in concerns about AI disruption.
“The underlying tone of the market is a shift towards more defensive areas of the stock market and companies with stable, less cyclical and more predictable earnings,” said Chris Weston, head of research at Pepperstone.
“It’s clear that investors are looking at developments in AI and AGI in a new light and are trying to price in a future that feels more uncertain and structurally disruptive than before.”
On Friday, MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 1.1%, narrowing the week’s gains to 3.7%. Japan’s Nikkei Stock Average fell 1.3%, but was still up nearly 5% for the week.
Chinese blue-chip stocks fell 0.9%, while Hong Kong’s Hang Seng Index fell 2.1%.
Nasdaq futures and S&P500 both fell 0.2%, while Euro STOXX50 futures rose 0.1%.
The Financial Times reported on Friday that President Trump plans to roll back some tariffs on steel and aluminum products, citing people familiar with the matter.
Traders await inflation test
A broad selloff in stocks sent buyers into U.S. Treasuries, with the benchmark 10-year Treasury yield dropping 7 basis points overnight, the steepest decline since Oct. 10. It was steady at 4.1134% in early trading on Friday.
The 30-year bond auction was very successful, causing long-term yields to fall. The yield on the 30-year Treasury note fell 8.5 basis points overnight to 4.728%, its lowest level since December 3rd.
Federal funds futures also rose, recovering most of their losses after the jobs report prompted markets to back off on the possibility of a June interest rate cut. A policy decision in June is priced in at 70%, with a total of 60 basis points of easing expected this year.
Much attention will be focused on US inflation statistics to be released later in the day. The forecast centers on a 0.3% monthly rise in the core index, which would be enough to slow the annual rate to 2.5% from 2.7% previously.
“Even the inline results reflect a significant slowdown from December, which could lift animal spirits and put energy back into cyclical trading,” said Jose Torres, senior economist at Interactive Brokers.
In the foreign exchange market, the risk-sensitive Australian and New Zealand dollars took a step back. Australia fell 0.5% overnight and fell 0.2% to $0.7071. Meanwhile, the kiwi fell 0.1% to $0.6029, after falling 0.3% overnight.
Precious metals tried to recover from heavy losses. Gold rose 1.3% to $4,984 an ounce after falling more than 3% on Thursday, while silver fell 10% overnight and rose 2.5% to $77.0 an ounce.
Oil prices extended their decline after plunging 3% overnight. The Associated Press reported that a US aircraft carrier is being sent from the Caribbean to the Middle East amid rising tensions with Iran.
U.S. West Texas Intermediate crude oil fell 0.3% to $62.66 per barrel, while Brent crude oil futures fell 0.2% to $67.37.
(Edited by Shri Navaratnam and Kim Cogill)
Reuters
