From Hideyuki Sano
TOKYO (Reuters) – US stock futures and Asian stocks regained a foothold on Tuesday after a slight rebound in European stocks as investors scrutinized whether soaring US tech stocks could rebound from their recent price.
MSCI’s broadest index for stocks in the Asia-Pacific region outside Japan rose 0.2%, while Japan’s Nikkei rose 0.4%. The US financial markets were closed on Monday for a holiday while the European STOXX 600 index was 1.7% higher.
Globally traded US S&P500 futures eliminated their losses on Monday and traded 0.6% higher. Tech stocks remained more fragile, however, as Nasdaq futures were unchanged after losing more than 6% late last week.
While many market participants say they can’t find a single trigger for the Nasdaq’s sudden plunge, valuations have been stretched after a 75% gain from a March low.
Tesla, the figurehead of euphoria among major U.S. tech stocks, with a whopping 400% year-to-date gain, is likely to fall after being excluded from a group of companies added to the S&P 500.
It lost 6.5% in over-the-counter trading on Friday and fell 2.7% in Frankfurt on Monday.
“These tech stocks have gotten expensive, so I would view their recent decline as a healthy correction,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.
Risk-weighted assets are also facing headwinds from doubts that US policymakers may not be ready to provide massive stimulus, as some traders have been hoping.
“The headlines from Friday’s US employment data were pretty good and speculative leaders may no longer be willing to spend trillions of dollars in support of the economy,” said Masahiko Loo, portfolio manager at AllianceBernstein.
“Markets may have gone too far to expect the Federal Reserve to announce further easing this month,” he said. Added expectations are one reason US bond yields have risen over the past week.
The US 10-year Treasury yield was 0.716% after a five-month low of 0.504% hit in August.
In currencies, the pound sterling fell after the European Union told the UK on Monday that there would be no trade deal if it tried to tinker with the Brexit divorce deal.
The warning came after it was reported that UK Prime Minister Boris Johnson’s administration was planning new legislation to override parts of the Brexit withdrawal agreement signed in January.
The pound fell 0.80% on Monday to $ 1.3167, its lowest level in two weeks.
Other currencies barely moved as US yields rose, which helped contain the dollar’s recent weakness.
The euro fell slightly overnight to hit $ 1.1818 while the dollar barely moved at 106.31 yen. Gold was barely changed at $ 1,930.9 an ounce.
Oil prices fell to a five-week low after Saudi Arabia made its lowest monthly price cuts for Asia in five months and uncertainty about Chinese demand clouded market recovery.
The US WTI futures fell 1.4% to $ 39.23 a barrel.
(Reporting by Hideyuki Sano; Editing by Christopher Cushing)