(AP) — Asian shares fell Wednesday, tracking a decline on Wall Street that was led by big technology stocks. Investors are awaiting the release of minutes from the latest Federal Reserve policy setting meeting.
Japan’s benchmark Nikkei 225 fell 1.4% in morning trading to 28,008.09. Australia’s S&P/ASX 200 slipped 1.9% to 6,936.00. The Shanghai Composite slipped 0.4% to 3,513.61. Markets were closed in Hong Kong and South Korea.
“Major U.S. markets ended the day lower, as investors took some risk off the markets ahead of the Fed minutes release later today,” said Yeap Jun Rong, market strategist at IG in Singapore. “Asia markets are set to track the U.S. indexes lower.”
A day after Japan reported its economy contracted at a 5.1% annual rate in the first quarter of this year, Fitch Solutions forecast the economy will grow 2.5% this year, highlighting the challenge as the country battles surging coronavirus infections.
“The slow vaccination roll-out in the country means that the country continues to face risks from sporadic movement restrictions and other tightening measures that will disrupt a healthy recovery in activity,” the report said.
The Tokyo Olympics, due to start in late July, will be held in such a reduced capacity, “the positive economic gains from the event will likely be negligible,” it said.
Stocks closed lower on Wall Street as a late-afternoon sell-off in technology companies helped nudge stock indexes into the red for a second straight day.
The S&P 500 lost 0.9% to 4,127.83, with most of the pullback coming in the last hour of trading. Apple, Facebook and Google’s parent company all lost 1% or more as technology stocks fell broadly. While they powered the market rebound last year, tech stocks are up only 2.6% this year, the lowest gain among the S&P 500′s 11 sectors.
Banks, industrial and communication companies also helped drag the market lower, easily outweighing small gains by health care stocks, among others. Investors continued to size up the latest batch of company earnings reports, including quarterly snapshots from Walmart and Home Depot.
“Stocks appear to be in consolidation mode, digesting strong year-to-date gains on the heels of a superb first-quarter reporting period,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
“We view this pullback that we’re experiencing over the last week or so as within the normal ebb and flow of a broad market that still has legs to trend higher.”
The Dow Jones Industrial Average fell 0.8% to 34,060.66. The tech-heavy Nasdaq dropped 0.6% to 13,303.64. The Russell 2000 index of small company stocks gave up 0.7% to 2,210.88.
The broader market made solid gains early in the year as investors bet on an economic recovery fueled by widespread vaccinations. Expectations were high for corporate earnings and the latest round of results has been surprisingly good. Wall Street is now digesting that growth and shifting to a more cautious view.
“Some sort of pause was always inevitable,” said Ross Mayfield, investment strategist at Baird. “Eventually markets see a more challenging landscape ahead and general uncertainty.”
