Global Tech Stocks Slump Sends Investors Fleeing to Safety

Asian shares were significantly impacted due to a global tech stock slump, driving investors towards safer assets like short-dated bonds, the yen, and Swiss franc. Chinese stocks saw little support despite stimulus measures. Volatility led to a spike in safe-haven assets and a broadly negative impact across global markets.

Asian shares experienced a significant downturn on Thursday as a sharp decline in global tech stocks drove investors to seek safer assets, including short-dated bonds, the yen, and the Swiss franc.

Chinese stocks received limited support following a surprise cut in longer-term rates by the central bank, adding to recent stimulus measures. The sell-off led to increased bets on global rate cuts, with futures indicating a 100% chance of Federal Reserve easing by September. Market volatility caused a squeeze on carry trades, pushing the dollar down 0.6% to 152.85 yen.

MSCI's Asia-Pacific index, excluding Japan, fell 0.7%, Japan's Nikkei dropped 2.9%, and South Korea's KOSPI lost 2%. Hong Kong's Hang Seng index fell 0.6%. In the U.S., the Nasdaq saw a 4% drop, its worst since 2022, affecting major tech stocks.

Safe-haven assets like the yen and Swiss franc surged, driven by unease over China's growth and poor European economic indicators. The yield on U.S. two-year Treasuries hit a six-month low, influenced by calls for rate cuts from former New York Fed president Bill Dudley. Commodity markets also took a hit, with gold and oil prices falling due to concerns about a slowing Chinese economy.

(With inputs from agencies.)