European shares down as Asian stocks hit 2021 lows

Iseq follows other indices down with European stocks trading 0.92% lower

Asian weakness weighed on European stocks, which fell 0.92 per cent, moving further away from recent record highs

Asian weakness weighed on European stocks, which fell 0.92 per cent, moving further away from recent record highs

 

European markets openeddown on Tuesday as Asian stocks hit their lowest this year on a third straight session of selling in Chinese internet giants, and real bond yields hit record lows ahead of a Federal Reserve policy meeting.

Asian weakness weighed on European stocks, which fell 0.92 per cent, moving further away from recent record highs. Britain’s FTSE 100 was down 1.23 per cent, while the Dublin market was 0.22 per cent lower. Global stocks fell 0.35 per cent.

The Hong Kong benchmark fell 4.57 per cent, its third day of declines, with the Hang Seng Tech index down 8.69 per cent to its lowest since its inception in July 2020. It has fallen around 17 per centin three days and has lost 44 per cent from a February peak.

Big decliners included Meituan and Alibaba , whose shares fell 16.1 per cent and 5.5 per cent respectively. Both were down for the third successive day with investors expecting the companies’ food delivery arms to be affected by new regulations guaranteeing workers above minimum pay.

Chinese bluechips dropped 3.53 per cent, also hitting 2021 lows, thanks to regulatory crackdowns in the education and property sectors.

“The market seems to be uncertain whether there will be more policy changes for fintech, social media platforms, delivery platforms and ride hailing platforms,” said Iris Pang, chief economist for Greater China at ING.

“Each has their own issue and faces different regulatory actions, so the market is looking for ‘which technology subsector will be next?’”

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.2 per cent to its lowest level since end-December, having slid 2.45 per cent the previous day.

Japan’s Nikkei rose 0.49 per cent, however.

Alphabet, Apple and Microsoft are set to publish quarterly results late on Tuesday, with Amazon’s due later in the week.

In addition, the Fed will begins its two-day meeting on Tuesday, with investors set to scrutinise a statement and press conference from chair Jerome Powell due late Wednesday.

They will be looking to see how the central bank will balance fast-rising prices with the complication of increased coronavirus infections.

“While we expect the Federal Reserve to prove more hawkish than expected...the negative impact on the equity market should be quite subdued as easy monetary policy is still there for quite a while,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.

Real, or inflation-adjusted, bond yields in the United States and Europe have fallen to record lows and on Tuesday, the yield on 10-year Treasury inflation-protected securities (TIPS) hit -1.147%, down 4 basis points on the day. German inflation-linked bond yields also extended their recent falls, hitting a new low at around -1.747%.

ING Bank strategist Antoine Bouvet said the fall in real yields could be explained by thin market liquidity and hefty central bank bond buying.

“Of course there are macro worries, and the phase of growth acceleration of this cycle looks to be over, but this does not justify rates where they are,” he said.

The yield on benchmark 10-year USTreasury notes slipped one basis point and 10-year German Bund yields dropped 2.6 basis points, close to a 5-1/2 month low set on Monday.

- Reuters