The selloff in technology stocks continued on Monday, with Asian markets following the declines in U.S. tech heavyweights Friday after months of sharp gains.
The move on Wall Street “was quite a significant reversal,” said Jingyi Pan, a market strategist at IG Group. Given the hype about tech shares and questions around them possibly being overvalued, this period ahead of second-quarter earnings season is “going to be a concern for the market,” she added.
Tech stocks have been on a hot streak in Asia as well, with some gaining nearly 70% year-to-date, driven by the optimism overseas as well as solid earnings.
With the sudden pullback, tech-heavy stock markets led the way lower Monday.
Korea’s Kospi SEU, -1.06% fell 0.8% amid a 2% drop in Samsung Electronics 005930, -1.74% , which makes up nearly one-quarter of the Kospi’s weighting and has led the index to a series of record highs recently.
Japan’s Nikkei Stock Average NIK, -0.60% fell 0.5%, as did the Taiex Y9999, -0.88% in Taiwan, which is home to several key Apple suppliers. Hong Kong’s Hang Seng Index HSI, -1.13% slid 0.6% as internet heavyweight Tencent 0700, -2.09% fell 1.7%.
Markets with less tech exposure, such as Singapore and New Zealand NZ50GR, -0.05% , were modestly higher. Singapore’s Straits Times Index STI, -0.03% rose 0.3%, adding to recent gains. The Australian and Malaysian markets were closed for public holidays.
Meanwhile, currencies were largely quiet after Friday’s action, which was spurred by the pound’s postelection slide. But the New Taiwan dollar, which has been a strong performer this year with money moving into the island’s stock market, fell 0.2% on Monday versus the greenback.
Oil started on an upbeat note, rising 0.5% after futures fell some 4% last week. Investors were relieved to see Qatar renew its pledge to the Middle East-led production cuts, but concerns remain regarding compliance by some participants, while increasing output from Nigeria and Libya stands to add more downside risks.
“For oil prices to rise, OPEC needs to work harder to reduce loadings over the coming months,” said Bernstein Research.