Asian tech stocks tumbled on Tuesday and a regional equity gauge suffered its biggest slide in nearly two months after a selloff on Wall Street, as traders braced for U.S. inflation data amid worries growing price pressures might bring forward rate rises.
MSCIs broadest index of AsiaPacific shares outside Japan fell 1.7 by midsession, its largest drop since late March, and Japans Nikkei fell 2.8.
Selling was heaviest in Hong Kong, where the Hang Seng tech index fell 4 and dragged the broader market down 2. That followed a 2.55 fall on the Nasdaq overnight, and Nasdaq 100 futures lost a further 1 in Asia trade.
Markets reversed course overnight as inflation fears drove investors away from growth stocks, notably the tech stocks, to pick cyclicals amid the momentum of the economic recovery, said Hong Hao, head of research at BoCom International.
Soaring commodity prices that have sent the cost of raw materials from copper to iron ore and lumber to record heights are the latest indicator that inflation may not be as transitory as some policymakers seem convinced. U.S. breakeven rates scaled multiyear peaks, even as profit taking dampened commodities.
A host of Federal Reserve speakers this week will be closely watched by markets to assess how authorities are likely to respond to receding risks posed by the coronavirus in some major economies.
A test case on U.S. inflation will come this week when the Labor Department releases its latest consumer price index report on…