Asia follows Wall Street down as Facebook breach hits tech stocks
Losses driven by fears of a regulatory response to news of "improper access" to the tech giant's data
Asian markets fell on Tuesday, following sharp losses in New York, after investors took profits in US technology stocks on fears of a regulatory crackdown as details emerged of a massive data breach at Facebook.
The scandal over improper access to Facebook user data comes as investors brace for a likely interest rate hike by the US Federal Reserve and the country’s president, Donald Trump steps up protectionist trade measures.
According to reports, Cambridge Analytica, a UK-based analysis firm hired by Trump’s 2016 presidential campaign, was able to steal data on 50 million Facebook user profiles which it then used to design software that may have influenced voting patterns.
On Monday, the news hammered tech giants in the US, with Facebook plunging 6.8%. Apple, Alphabet and Netflix were all hit as fears of stiffer regulation in the sector prompted jitters.
Greg McKenna, chief market strategist at AxiTrader, told Agence France-Presse: “The adults are starting to realise that the altruistic kids who started some of these tech behemoths are either unwilling or unable to deal with the fact that the companies they wrought and thought were a force for good can be manipulated by those who seek to do ill.”
The US losses filtered through to Asia, with internet giant Tencent and AAC Technologies, both listed in Hong Kong, falling sharply. Samsung retreated in Seoul, while Sony was 1% lower in Tokyo.
Japan’s Nikkei went into the break more than 1% lower overall, while Hong Kong shed 0.6% and Sydney was off 0.5%.
On Wall Street, the S&P 500 earlier lost 1.42% and the Nasdaq 1.84%, both suffering their worst day in five weeks.
“US tech indexes, including Nasdaq and Philadelphia’s semi-conductor index all hit record highs last week, so they were prone to profit-taking,” Mutsumi Kagawa, chief strategist at Rakuten Securities, told Reuters. “Shares will be capped by various uncertainties for now. Once those uncertainties are cleared, investors will shift their focus back to relatively attractive valuations.”
The looming potential of an international trade war has also cast a shadow. The Trump administration is expected to unveil up to US$60 billion in new tariffs on Chinese imports by Friday, targeting technology, telecommunications and intellectual property.
Meanwhile, the Federal Reserve’s two-day policy meeting, due to commence on Tuesday, will be watched closely for clues about the timetable for monetary tightening. The Fed appears set to bump up its policy interest rates to 1.50-1.75% from the current 1.25-1.50% range. However, opinion is split on the number of hikes it will announce this year, with some forecasting three and others saying four.
With reporting from Agence France-Presse and Reuters