Asian Stocks Stumble as US Weakness Spills Over

Asian equities faltered on Friday, following a lackluster session on Wall Street that weighed heavily on tech stocks and bonds. The MSCI Inc.'s gauge of Asian shares plummeted as much as 0.7%, despite being on track for a second consecutive weekly gain. Japanese indexes led the losses in the region, after a strong rally in the previous session. The decline was largely attributed to the weak performance of US stocks, with the S&P 500 climbing just 0.1% on Thursday. US futures edged slightly higher, but the gains were modest, indicating a cautious investor sentiment. The yield on 10-year Treasuries steadied after rising three basis points in the previous session, a sign that investors were still wary of taking on excessive risk. The market impact was significant, with tech stocks and bonds being the hardest hit. The Nasdaq Composite, which has been a bellwether for the tech sector, fell 0.5% on Friday, while the yield on 10-year Treasuries rose to 3.85%, a level not seen since 2007. The decline in tech stocks was particularly pronounced, with the likes of Apple and Amazon falling 1.2% and 1.5%, respectively. The company context was also noteworthy, with several major players in the tech sector reporting disappointing earnings in recent weeks. The sector's woes were compounded by concerns over inflation, which has been rising steadily in recent months. The release of key US inflation data later on Friday was eagerly anticipated, with investors hoping for a slowdown in price growth. The industry background was also relevant, with the tech sector being a major driver of growth in the US economy. The sector's decline was therefore a cause for concern, with many investors worried about the impact on the broader economy. The decline in tech stocks was also a reflection of the sector's overvaluation, with many stocks trading at levels that were not supported by their underlying fundamentals. Looking ahead, the outlook for Asian equities was uncertain. While the region's markets were still on track for a second consecutive weekly gain, the decline on Friday was a warning sign that investors were becoming increasingly cautious. The release of US inflation data later on Friday would be a key driver of market sentiment, with a slowdown in price growth likely to boost investor confidence. However, a surprise increase in inflation would likely lead to a further decline in tech stocks and bonds, with potentially significant implications for the broader economy.