Stock Futures Rise, Global Indexes Mixed After Rout
U.S. stock futures and European shares rose Wednesday, a day after rising bond yields triggered the biggest rout on Wall Street in months.
The prospect of the Federal Reserve starting to taper, or reduce, its bond-buying as soon as November—and possibly beginning to raise interest rates next year—has combined with surging prices for oil and other commodities to push bond yields up.
In turn, that tends to weigh on shares of fast-growing tech companies. These stocks are especially sensitive to changes in interest rates, as reflected in benchmark bond yields, because much of the value investors ascribe to them is based on far-off future profits.
U.S. stock futures rose modestly, suggesting that American markets could regain some ground. Futures tied to the S&P 500, Nasdaq-100 and Dow Jones Industrial Average rose about 0.5% to 0.6%.
Bond yields, which rise as prices fall, were little changed, after the benchmark 10-year Treasury yield hit 1.534% Tuesday, its highest point since June. On Wednesday, the yield on 10-year Treasury notes stood at 1.536%, according to Tradeweb.
In Tokyo, Japan’s Nikkei 225 index had dropped 2.6%, while the Kospi Composite in Seoul fell about 2%. Australia’s S&P/ASX 200 dropped 1.1%.
In Hong Kong, the city’s flagship Hang Seng Index dropped 0.5%, with Chinese tech stocks following their American peers downward. Sector heavyweight
shed 2.8%, while food-delivery giant Meituan dropped more than 3%.
Investors questioned whether Asia’s tech stocks could sustain their current valuations, based on prices as a multiple of earnings, amid quicker inflation and rising interest rates, said Zhikai Chen, head of Asian equities for BNP Asset Management.
“For the remainder of the year, it’s going to be challenging,” he said. Mr. Chen said some Asian growth stocks could potentially pull back 10% or more, though he was more sanguine about Chinese tech firms, which have already sold off significantly due to a barrage of actions by Chinese authorities.
More broadly, Mr. Chen said pricier commodities could also crimp profits for some listed companies.
Stocks in the Asia-Pacific region were likely to be buffeted by a number of concerns, including questions about the Fed’s tapering and moves by Chinese regulators, said Jim McCafferty, the joint head of regional equity research at Nomura.
“In the short term, there is going to be a lot of volatility,” he said.
Shares in
gained 10% after the ailing real estate giant said it agreed to sell part of its stake in a Chinese regional bank for more than $1.5 billion.
Write to Frances Yoon at frances.yoon@wsj.com and Quentin Webb at quentin.webb@wsj.com
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