Asian markets sold off on Monday on the expectation of tight US restrictions on investments in China, while European stocks rose ahead of first-quarter results from the world’s biggest tech companies this week.
The region-wide Stoxx 600 added 0.3 per cent in early trading and London’s FTSE 100 fell 0.4 per cent. The moves came as Credit Suisse announced it suffered SFr61.2bn ($68.6bn) of asset outflows in the first quarter. Shares in UBS, which agreed to take over Credit Suisse last month, rose 0.1 per cent.
Asian equities continued to slide, with Hong Kong’s Hang Seng index down 0.6 per cent and the Hang Seng Tech index down 1.1 per cent.
Markets expect US president Joe Biden to sign an executive order at next months’ G7 summit that will tighten rules on investments by US companies in key parts of China’s economy.
Growing tensions in the South China Sea have further soured the mood among investors, many of whom now expect a further “worsening” of tensions between China and the US, said Sonija Li, head of retail research at MIB Securities. Hong Kong stocks are likely to fall back to levels last hit in March in the near term, Li added.
China’s CSI 300 fell 1.2 per cent, dragged lower by basic materials, property and consumer non-cyclicals.
Stocks have fallen steadily since China’s released economic data last week showing gross domestic product was on track to meet or exceed the government’s target of 5 per cent growth for the year.
Nevertheless, the property sector remains under pressure. Investment fell 5.8 per cent, and home sales by area slipped 1.8 per cent in the first quarter, while new housing starts sank 19.2 per cent year on year.
In the US, contracts tracking Wall Street’s benchmark S&P 500 and those tracking the tech-heavy Nasdaq 100 both fell 0.5 per cent ahead of the New York open, with traders awaiting the latest earnings from Microsoft, Alphabet and Amazon this week.
Big Tech stocks have held up well even as US interest rates have continued to climb, propping up the wider market so far this year.
First Republic’s results after the New York close meanwhile are expected to shed light on how the bank fared after other lenders in March spent $30bn to stabilise its balance sheet during the banking crisis.
US government debt rallied on Monday, with the yield on interest rate-sensitive two-year Treasuries down 0.03 percentage points to 4.15 per cent and the yield on the benchmark 10-year note down by the same amount to 3.53 per cent. Yields move inversely to prices.
A measure of the dollar’s strength against a basket of six major currencies was steady.