Every picture Tesla story | Reuters

Jan 4 (Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.

If the first proper global trading day of 2023 offers any clue on how the following 12 months will unfold, buckle up.

The fairly upbeat mood in Asia and Europe was crushed in US hours as another collapse in Tesla Inc (TSLA.O) shares dragged tech lower, soured risk appetite, and prompted defensive flows into Treasuries and the dollar.

Equity, bond and currency volatility rose also, and the negative close on Wall Street will likely set the tone for Asia’s open on Wednesday. Tech investors, in particular, should brace themselves.

Big Tech loses weight in S&P 500

Tesla plunged as much as 15% on Tuesday after it missed Wall Street estimates for quarterly deliveries, and the company has lost almost 75% of its market cap in barely over a year. iPhone maker Apple Inc (AAPL.O) dropped to its lowest since June 2021 and its market cap dipped below $2 trillion.

Hong Kong’s Hang Seng tech index kicked off the year with a stellar 2.5% rise on Tuesday and the MSCI Asia tech index has advanced three days in a row, its best run in a month.

But all that seems poised to reverse on Wednesday.

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Rising interest rates was the scythe that cut tech off at the knees last year as the US Federal Reserve embarked on the most aggressive tightening cycle in 40 years. The cycle may be drawing to a close, but the Fed may yet surprise on the upside this year.

Job openings on Wednesday and non-farm payrolls on Friday will give the most up-to-date pulse of the US labor market. Solid numbers, including wage growth, could tilt expectations for next month’s policy meeting back up to a 50 basis point hike from 25 bps.

Before that, the Fed on Wednesday releases the minutes of its Dec. 13-14 policy meetings.

Global financial conditions – across developed and emerging markets – have tightened since then, according to Goldman Sachs. Its US financial conditions index has risen some 40 bps, mainly due to higher long rates and lower equities.

If global tech and equity bulls are to get any traction, easing financial conditions and central bank rate hike expectations will have to set in first.

Three key developments that could provide more direction to markets on Wednesday:

– India S&P Global services PMI (December)

– US Fed policy meeting minutes

– US ‘JOLTS’ job openings (November)

Reporting by Jamie McGeever in Orlando, Fla.; Editing by Marguerita Choy

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Jamie McGeever

Thomson Reuters

Jamie McGeever has been a financial journalist since 1998, reporting from Brazil, Spain, New York, London, and now back in the US again. He focus on economics, central banks, policymakers, and global markets-especially FX and fixed income. Follow me on Twitter: @ReutersJamie

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