(Feb 5) : Asian stocks were set to follow US shares lower as selling in technology stocks gained pace. Bitcoin extended its selloff.

Equity index futures for Hong Kong, South Korea and Australia all fell in early Asian trading, while an index of US-listed Chinese firms dropped 2% Wednesday. The declines echoed a 0.5% fall for the S&P 500. The Nasdaq 100 saw its worst two-day rout since October, breaching its 100-day moving average, a level seen by some technical analysts as a harbinger for more losses.

Software firms saw another wave of selling, but moves were bigger in chipmakers. In late hours, Alphabet Inc. fell more than 7.5% in post-market trading before recovering after spending forecasts exceeded estimates, capping a bruising day for the Magnificent Seven, which fell 1.8%.

The tech-heavy selloff reflected further concerns among investors regarding tech valuations, high levels of spending and the potential for AI to cannibalise established software business models.

“There might be a glass half full and a glass half empty perspective on the moves here,” said Kyle Rodda at Capital.com. “On the one hand, tech stocks are potentially too richly valued. On the other hand, the strength in the market is broadening out in a sign of improving economic fundamentals.”

Bitcoin hovered near US$73,000, with prediction traders betting the world’s most popular cryptocurrency will drop below US$65,000. Treasuries were mixed, with the short-end of the curve rallying. The US two-year yield fell two basis points while the 10-year ended Wednesday one basis point higher. The dollar added 0.3%.

Clear signs of momentum behind the tech sell-off emerged. The iShares MSCI USA Momentum Factor ETF plunged 3.7%, while a Goldman Sachs Group Inc. basket that goes long high-beta momentum names and short the opposite tumbled 9.8%.

“The news for the software stocks gets worse by the day,” said Matt Maley at Miller Tabak. “However, no matter where they are headed over the intermediate and long-term, they are getting poised for a nice bounce over the near-term. Investors should be careful about negative bets over the short-term.”

In Asia, data set for release includes inflation for the Philippines, Thailand and Taiwan, retail sales for Singapore and gross domestic product for Indonesia. In Japan, traders await a sale of 30-year bonds.

The yen fell 0.7% to around 157 per dollar Wednesday, while the pound and euro were also softer ahead of interest rate decisions due later Thursday. The European Central Bank and Bank of England are expected to leave rates unchanged.

In the US, service providers saw the strongest back-to-back growth since 2024 as business activity picked up even as employment barely expanded. While companies added fewer jobs than expected, recent data has pointed to limited layoffs.

Elsewhere, US President Donald Trump and President Xi Jinping of China discussed trade and geopolitical flashpoints, including Taiwan, during a Wednesday call ahead of a planned face-to-face meeting later this year.

In commodities, oil rose as conflicting reports on the status of nuclear talks between the US and Iran clouded the outlook on whether Washington will proceed with military strikes. Gold remained below US$5,000.

uploaded by Isabelle Francis