Investing.com — Most Asian stocks fell on Thursday, tracking overnight losses on Wall Street after Fitch’s downgrade of the U.S. sovereign rating somewhat dented sentiment, while strong payrolls data also pushed up concerns over rising interest rates.
Fitch had earlier this week downgraded its rating for the U.S. government to AA+ from AAA, citing concerns over fiscal spending and increased clashes between the Democrats and Republicans.
While analysts downplayed the direct impact of the downgrade, the move still triggered a wave of selling across global stock markets, as investors locked in profits after a strong run through June and July.
Technology stocks see extended profit taking, strong payrolls data weighs
Tech stocks, which had seen strong gains over the past two months, bore the brunt of selling pressure, with South Korea’s and Hong Kong’s index falling 0.8% and 0.6%, respectively.
Stocks were also rattled by stronger-than-expected U.S. data on Wednesday, which boosted the dollar and Treasury yields as markets positioned for a similar reading from official data due on Friday.
Resilience in the U.S. economy – particularly in the labor market – gives the Federal Reserve more headroom to keep raising interest rates, which bodes poorly for risk-driven stock markets.
Tech stockholders were also on edge ahead of earnings reports from Apple Inc (NASDAQ:) and Amazon.com Inc (NASDAQ:).
Broader Asian markets retreated. Japanese stocks were among the worst performers for the day, with the index sliding 1.6%, while the broader fell 1.2%. Local stocks were hit by a mix of profit taking, as well as uncertainty over the Bank of Japan’s stance on its ultra-dovish monetary policy.
Australia’s fell 0.5% as data showed that the country’s remained steady in June. Australian also fell less than expected in the second quarter.
Futures for India’s index pointed to a slightly positive open, after the index plummeted from record highs this week. High weightage of technology stocks weighed heavily on the Nifty and the in recent sessions.
Chinese stocks limit losses as PMI data signals some strength
China’s and indexes fell less than their peers on Thursday, as a showed that the country’s services sector grew more than expected in July.
The reading indicated that steady retail spending and services demand was still keeping some facets of Chinese business activity afloat, and could help support a bigger economic recovery this year, especially if the government rolls out more stimulus measures.
But investors appear to have somewhat soured on the prospect of more Chinese stimulus, given that officials have offered up few details on how the measures will be carried out. The country’s biggest economic engines – manufacturing and real estate – are also struggling despite promises of more support.