Asian markets took a battering overnight as tech stocks crashed across the region, sending shivers through global investors. The Nikkei 225 dropped 3.2%, while Hong Kong’s Hang Seng shed 2.
8%, led by a rout in semiconductor and e-commerce shares. The catalyst appears to be a combination of renewed trade tensions and rising bond yields in the United States, which have sucked capital out of riskier assets. For the City of London, however, the FTSE 100 showed remarkable resilience, closing flat as defensive sectors and commodity plays cushioned the blow.
This divergence speaks volumes about the current market regime: the tech-heavy indices of Asia and the US are vulnerable to the whiplash of rate expectations, while the old-world value stocks of the FTSE offer a haven. The Bank of England’s cautious stance on rate cuts has kept gilt yields anchored, attracting foreign buyers looking for yield without the drama. Capital flight from Asia is likely to continue, and London stands to benefit as a safe harbour.
But make no mistake: if the sell-off deepens, no market is an island. The bottom line is that this is a classic risk-off rotation, and the smart money is hedging its bets.
