Market Commentary      

Tech stocks sold off on Wall Street after US jobs report

·           Investors retreated from US stocks on Friday, dumping shares in large technology companies and sending the Nasdaq Composite index sharply lower, as a mixed US jobs report was seen as paving the way for more hawkish monetary policy, which would lead to tighter financial conditions and weigh on corporate valuations.

·           The technology-focused Nasdaq Composite dipped 1.9% to 15,085.47. The S&P 500 dropped 0.8% to 4,538.43. The Dow Jones Industrial Average fell 0.2% to 34,580.08, dragged down by a 1.9% loss in Boeing. The major averages posted a losing week.

·           The Bureau of Labour Statistics showed the US economy added just 210,000 new jobs last month. While the economy added fewer jobs than forecast, the unemployment rate still fell to its lowest level since the pandemic began, to 4.2% against estimates of 4.5%, indicating that this was not a weak jobs report.

·           For investors, the data has left the door open to a faster pace of monetary policy tightening, based on Federal Reserve chair Jay Powell’s support for a quicker wind-down of the central bank’s US$120 billion-a-month of bond purchases. The programme has been a crucial pillar for the rally in equities prices since the depths of the coronavirus crisis last year.

·           Adding to the whipsaw movements across stock markets was a move to book in profits as the year nears its end, to avoid the turn in sentiment amid a more hawkish Fed, emerging signs of slowing global growth and the potential for the Omicron coronavirus variant to derail the US economic recovery. President Joe Biden has announced measures to slow the spread of coronavirus, including tighter US testing requirements for international travellers.

·           Much uncertainty remains around the economic impact of the recently discovered Omicron variant. As more cases are being detected globally, experts say the new strain had likely already been circulating for some time.

·           In Europe, Germany has moved to impose social curbs on unvaccinated people; the Stoxx Europe 600 share index fell 0.6%.

·           In Asia, regional markets preferred a wait-and-see approach on Friday despite the previous night’s Wall Street rally, ahead of the US’ non-farm payrolls that came out on Friday night.

·           Singapore shares inched into positive territory, up 0.3% at 3,101.93.

·           Japan’s Nikkei 225 rose 1% but Hong Kong’s Hang Seng shed 0.1% after the ride-hailing app Didi announced plans to delist from the New York Stock Exchange — less than six months after it made its debut — and to prepare to go public in Hong Kong. While the risks of delisting had been brought up previously, a step closer towards a final mandate seems to serve as a reminder for the regulatory risks in Chinese stocks. Didi’s shares dropped more than 20% in US hours. JD.com, Baidu and Pinduoduo all fell about 8%, as did Alibaba.

·           Chinese stocks closed higher, with the Shanghai Composite rising 0.94% to 3,607.43.