Global Stocks Under Pressure as Asian Tech Shares Slip

By Kenan Machado and Riva Gold Features Dow Jones Newswires

Chinese stocks end lower

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-- Asian tech shares under pressure

-- European stocks reverse early weakness

European stocks and U.S. futures reversed early losses Monday after declines in Chinese and South Korean equity markets rippled overseas.

The Stoxx Europe 600 inched up 0.1% late morning despite opening lower, led by a 7.4% jump in shares of online grocery retailer Ocado Group.

Futures suggested the S&P 500 would add 0.1% after closing above 2600 for the first time Friday. Shares of technology companies and retailers climbed ahead of a weekend of holiday sales, helping lift the broader index.

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"It would seem like we are off to a good start [to the holiday shopping season]", said JJ Kinahan, chief market strategist at TD Ameritrade. Hopes for a solid final quarter as well as better-than-expected earnings reports have drawn some investors back into beaten down retail shares in recent sessions, helping broader markets rebound quickly from a wobble the previous week.

"You tend to run the same play time and time again until they show they can stop it and nothing in the market has stopped the buy the dip mentality," said Mr. Kinahan.

Earlier, declines in shares of technology giants and domestic Chinese shares weighed down Asian bourses.

China's market fell anew after Thursday's slump. The CSI 300, which consists of the biggest stocks in Shanghai and Shenzhen, was down 1.3% Monday, while the Shenzhen Composite fell 1.5% and the Shanghai Composite was off 0.9%.

Chinese equities had also dropped sharply Thursday when leading stock indexes there fell more than 2% before rebounding somewhat Friday.

"It is quite clear that the People's Bank of China is trying to break the notion of an implicit guarantee" to all Chinese firms, said Xie Dongming, head of Greater China research at OCBC Bank.

He added that by raising funding costs for overleveraged and badly managed firms, the government is trying to move local markets toward global standards on pricing credit risks.

South Korea's Kospi slid 1.4% and Taiwan's Taiex dropped 1% Monday after Morgan Stanley downgraded their stock ratings for Samsung Electronics and Taiwan Semiconductor, each their respective index's largest component by far. Samsung Electronics ended down 5.1%, cutting the year's surge to 46%, while Taiwan Semiconductor shed 2.9%, reducing its advance to 31%. Both had their worst days in a year Monday.

Hong Kong's Hang Seng Index fell 0.6% amid losses in index heavyweight Tencent, while Japan's Nikkei closed down 0.2%, after rising as much as 0.5% shortly following the open as the yen rose on safe-haven demand.

While Monday's economic calendar is light, a series of data reports are due from around the world later this week.

"We expect a steady stream of positive growth data in Asia this week--from Japan and South Korea's industrial production to Australia's capex and India's GDP," said Klaus Baader, head of research for Asia at Société Générale.

The U.S. Commerce Department also releases inflation data for October later this week, while the Senate Banking Committee holds a confirmation hearing for Jerome Powell, the man nominated to serve as the next chairman of the Federal Reserve.

In commodities, Brent crude oil was last down 0.4% at $63.21 a barrel ahead of an OPEC meeting Thursday, while copper futures fell 1.2% to $6,931 a ton. Gold rose 0.5% to $1,293 an ounce.

Grace Zhu contributed to this article.

Write to Kenan Machado at kenan.machado@wsj.com and Riva Gold at riva.gold@wsj.com

-- Asian tech shares under pressure

-- Oil prices drop ahead of OPEC meeting

-- Bond yields edge lower

Global stocks struggled for traction Monday after steep declines in Chinese and South Korean markets.

Futures suggested the S&P 500 and Nasdaq would open 0.1% lower after climbing to fresh records on Friday.

The Stoxx Europe 600 swung between small gains and losses and was last down 0.2%, with shares of Swiss private-banking company Julius Baer Group among the biggest decliners after its chief executive resigned.

Both bourses had started the day with losses after Shanghai stocks dropped to a three-month low and South Korea's Kospi index posted its biggest daily decline since August.

China's CSI 300, which consists of the biggest stocks in Shanghai and Shenzhen, fell 1.3% Monday after slumping on Thursday.

"It is quite clear that the People's Bank of China is trying to break the notion of an implicit guarantee" to all Chinese firms, said Xie Dongming, head of Greater China research at OCBC Bank.

Meanwhile, Morgan Stanley downgraded stock ratings for Samsung Electronics and Taiwan Semiconductor, by far the largest components in South Korea's Kospi and Taiwan's TAIEX, weighing down technology shares across the region.

Much of the recent selloff in Asian shares has come from companies that have already posted massive gains this year, said Andrea Cicione, head of strategy at TS Lombard, noting investors are questioning whether they are willing to pay up front for all the growth that these companies will deliver.

"But we haven't seen anything for the moment that worries us," he said, noting fundamentally, the outlook for the economy and global equities remains sound and investors generally feel they can't afford to miss out on this market.

While Monday's economic calendar is light, a series of data reports are due from around the world later this week. The U.S. Commerce Department releases inflation data for October, while the Senate Banking Committee holds a confirmation hearing for Jerome Powell, the man nominated to serve as the next chairman of the Federal Reserve.

The retail sector is also likely to remain in focus later Monday after climbing Friday in the U.S. ahead of a weekend of holiday sales.

"It would seem like we are off to a good start [to the holiday shopping season]", said JJ Kinahan, chief market strategist at TD Ameritrade. Hopes for a solid final quarter as well as better-than-expected earnings reports have drawn some investors back into beaten down retail shares in recent sessions.

"It's actually a much brighter outlook for retail than perhaps many of us thought six months ago," he said.

In commodities, Brent crude oil was last down 0.7% at $63.21 a barrel ahead of an OPEC meeting Thursday, while copper futures fell 1.2% to $6,934 a ton.

As investors favored assets considered safe, yields on 10-year German bonds fell to 0.343% from 0.361% Friday while 10-year Treasury yields fell to 2.332% from 2.342%. Yields move inversely to prices.

Gold rose 0.5% to $1,293 an ounce, while the yen strengthened 0.2% against the dollar.

Grace Zhu contributed to this article.

Write to Riva Gold at riva.gold@wsj.com and Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

November 27, 2017 09:13 ET (14:13 GMT)