Tech stocks continued to sell off as strong U.S. employment data boosted expectations of a Federal Reserve rate hike, widening the market decline. Tensions in the Middle East escalated, pushing oil prices higher and driving down U.S. Treasury prices.
MSCI Asia Index fell as much as 4%, marking the largest single-day drop since early March. South Korea’s Kospi dropped 6% after briefly plunging more than 8%, triggering a temporary trading halt. Japanese and Taiwanese stock markets also declined.
Brent crude oil prices rose 3%, surpassing $96 per barrel, after Israel announced attacks on multiple military targets in Iran in retaliation for Tehran’s missile strike. The rise in oil prices is expected to further fuel inflation, and combined with strong U.S. employment data, the market anticipates that the Federal Reserve will raise interest rates.
The decline in global stock and bond markets marks the biggest setback for the recent bull market. This rally began at the end of March, when negotiations aimed at ending the Iran conflict officially commenced. As concerns over inflation and high oil prices intensified, investors began questioning whether AI-driven gains could be sustained and grew skeptical about whether this surge had been too rapid and excessive.
The Nasdaq 100 index fell 4.8% on Friday, while growing concerns over overvaluation pushed the S&P 500 down 2.6%, failing to extend its winning streak to a tenth consecutive week. The Philadelphia Semiconductor Index plunged 10%.
Asian chipmakers’ stock prices were also broadly weak. Samsung Electronics’ shares plunged 11%, SK Hynix fell 10%, and TSMC’s stock dropped 5.7%.
Tim Moe, chief stock strategist for Asia-Pacific at Goldman Sachs, said on Bloomberg Television: “In the long run, this will ultimately prove to be a technical pullback, although it is concerning within an extended bull market. The issue is that stock prices have already risen significantly, creating substantial profit-taking opportunities, and there are signs of increased speculation, particularly among retail investors in South Korea.”
Technical Analysis:
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Gold: After the release of non-farm data, prices dropped nearly $200, experiencing an overbought correction in the short term, indicating a need for intraday rebound and adjustment. However, we should not actively enter; instead, wait for prices to naturally recover above 4350/60 before seeking buying opportunities on pullbacks. Additionally, if prices rebound near 4400, be cautious of potential downside risks. For detailed levels, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: Price dropped nearly 1200 basis points from last Friday, with a significant short-term correction. Today, watch for potential rebound opportunities after the overnight low is tested and liquidity is absorbed. For detailed levels, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Prices have swept through the yellow zone liquidity we mentioned on Friday and are currently rallying before pulling back. We recommend holding the short position from this morning for now; if the triangle consolidation pattern continues to break downward, then reduce positions and push for protection. For detailed levels, please consult the plugin.
(Crude Oil 15-minute Chart)
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Today’s key financial data and events to watch:
22:00 U.S. Conference Board Employment Trends Index for May
