Asian stocks rounded out a tough week with a further sell-off Friday as technology companies in the region were roiled by escalating concerns about their business in the U.S. Ten-year Treasury yields held near seven-year highs before the American payrolls report.
The MSCI Asia Pacific Index is set for its worst week since March, with emerging markets walloped anew by the surge in U.S. yields that’s stress-testing riskier asset classes. Tech shares led declines on Friday, with Chinese PC maker Lenovo Group Ltd. down as much as 23 percent in Hong Kong. The Nasdaq 100 Index on Thursday saw its worst day since June after Bloomberg’s report that China infiltrated U.S. companies with hardware hacks. The dollar was little changed, heading for a second straight weekly rise.
Investors will keep a close eye on Friday’s monthly U.S. payrolls report after the sell-off in bonds that’s been in part triggered by data underscoring the strength of the American economy. Federal Reserve Chairman Jerome Powell also stoked the surge in yields this week when he said the central bank could eventually boost its benchmark past the neutral level. Meanwhile, resurgent commodity prices are raising the prospect of a fresh tailwind to inflation.
“It’s important to focus on the fundamentals — the global economy is still in pretty good shape, in particular the U.S. and that’s why yields are rising,” Anne Anderson, head of Australian fixed income at UBS Asset Management, told Bloomberg TV. “So I wouldn’t be looking at a significant increase in U.S. yields from here.”
Also coming up Friday is the Reserve Bank of India’s policy decision, with most economists expecting a 25 basis-points hike. Complicating matters amid a slide in the rupee and rising oil prices is a cash crunch in the banking system and a crisis at one of the country’s biggest infrastructure financiers.
Elsewhere, West Texas Intermediate crude oil prices traded below $75 a barrel.