Singapore, Asia markets mostly down after Wall Street tech rout
STI closes 0.8 per cent lower on Friday
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[SINGAPORE] Asian markets largely ended the week in the red on Friday (Feb 6), taking the cue from the US markets on Thursday where tech stocks and crypto slumped over concerns of soaring artificial intelligence (AI) spending.
Investors reacted badly to the news that Amazon plans to spend US$200 billion this year on data centres, chips and other equipment, concerned over whether the costly investments will be justified by the financial returns.
In Singapore, the Straits Times Index (STI) dropped 0.7 per cent in the first 30 minutes of trading and was still down that amount by midday. The index closed at 4,934.41, 0.8 per cent or 41.46 points lower.
Yangzijiang Shipbuilding was among the worst hit of the blue chips on the Singapore Exchange, closing 6.2 per cent or S$0.21 down at S$3.16. Volume traded was high, with 51.4 million shares changing hands.
The shipbuilder was likely also affected by a drop in Maersk earnings and plans for the Danish shipping company to cut 1,000 jobs. Shares of Maersk in Copenhagen fell 3.7 per cent by close on Thursday.
As at the midday trading break, shares of DBS were down about 0.7 per cent, OCBC dropped 0.9 per cent and Singtel declined 0.8 per cent.
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DBS pared some of its losses to close 0.6 per cent or S$0.36 down at S$59.30. OCBC dropped 1 per cent or S$0.22 to close at S$21.23, and Singtel’s shares retreated 1.3 per cent or S$0.06 to close at S$4.72.
Hong Kong’s Hang Seng Index dropped 2 per cent immediately upon market open, but recovered ground to end 1.2 per cent down at market close. Meanwhile, Shanghai’s CSI 300 opened 1 per cent lower, but eased to end 0.6 per cent lower.
South Korea’s Kospi was down 3.9 per cent at 10.30 am local time but recovered to close 1.4 per cent lower. Meanwhile, Japan’s Nikkei 225 and Topix were down 0.8 and 0.1 per cent at 10.30 am, respectively, but reversed momentum to rise 0.8 per cent and 1.3 per cent by close.
Kuala Lumpur’s KLCI was 0.1 per cent down as at midday in Malaysia, but rose 0.1 per cent by market close.
On Thursday, the tech-heavy S&P 500 in the US had fallen 1.2 per cent, and the similarly tech-focused Nasdaq 100 saw its worst three-day drop since April.
“...Markets started to become concerned about the rising cost of AI,” Maybank analysts said in a note on Friday.
Bitcoin, the most popular and valuable cryptocurrency, tumbled to around US$63,000 in a sell-off that has seen its value drop about 50 per cent in just three months.
“That theory, that Bitcoin’s price wouldn’t fall below mining costs, is being tested in this sell-off. There’s no convincing answer to what the bottom might be. It will be determined by appetite for this highly speculative asset with limited use cases,” Ipek Ozkardeskaya, senior analyst at Swissquote said in a Friday note.
Maybank analysts noted that Fed chair nominee Kevin Warsh, who is preparing for his confirmation, is an ex-Fed official known for his hawkish bias and his opinion that the Fed balance sheet should be smaller.
“For a market that is driven by capital flows and liquidity, that likely undermined Bitcoin sentiment, along with other smaller crypto coins,” they said.
Since the announcement of his nomination on Jan 29, Bitcoin has fallen 32 per cent, Ethereum 38 per cent, silver 43 per cent, and gold 15 per cent, Maybank added.
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