European and Asian stocks fell on Monday after the worst week for global stocks in more than a year, as investors considered the possibility of a tighter monetary policy than the US Federal Reserve.
Shares in fast-growing technology companies, which are considered vulnerable to higher interest rates, led to declines, with South Korea’s Kospi technology index down 1.5 percent and Hong Kong’s Hang Seng Tech down 2.9 percent. hundred.
Chinese technology companies also fell as the Kuaishou video-sharing app fell 3.1 percent, the Meituan food delivery group lost 2.2 percent and the Tencent Internet group fell 1.3 percent. European technology stocks have also fallen.
Hong Kong’s broader Hang Seng fell 1.2 percent, while Australia’s S & P / ASX 200 fell 0.5 percent and Tokyo’s Topix fell 1.2 percent before recovering. In European markets, the Stoxx 600 regional index fell 0.4%, with markets in London, Frankfurt and Paris reporting similar declines at the beginning of trading.
Investors are focused on the prospect that the Fed will take a further hawkish lean at its interest rate meeting this week as its employees seek to fight high inflation.
Goldman Sachs said over the weekend that it expects the Fed to signal this week that it will start raising interest rates from historic lows in March. However, the Wall Street bank warned customers that there was a risk that the Federal Open Market Committee would want to take some tightening action at each meeting until the picture changed.
Goldman added that the Fed has a chance to raise interest rates more than four times this year – more aggressively than the three to four interest rate hikes that have been assessed in the markets in recent weeks.
Higher interest rates increase borrowing costs for companies across the spectrum. However, the specter has proved particularly painful for companies, which are preferred because of their strong growth prospects, as higher long-term bond yields tarnish the attractiveness of more speculative assets.
Shares in the Tokyo Stock Exchange’s Mike market for high-growth startups, for example, have fallen about 18 percent so far this year. In the United States, the index of unprofitable technology stocks collected by Goldman lost about one-fifth of its value this year.
“This is a very challenging start to the year,” said Takeo Kamai, head of implementation at CLSA in Tokyo. “Investors are selling the most popular names, and although we are seeing some appetite here, many are working on whether it is safe to return.”
The FTSE All-World stock index fell more than 4% last week in its strongest decline since October 2020. Wall Street stocks hit particularly hard, with the tech Nasdaq Composite down 7.6%.
The global cryptocurrency market stabilized on Monday after the price of bitcoin, the highest in market value, fell to a six-month low on Saturday after investors gave up speculative assets.