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SYDNEY, Feb 13 : Asian shares retreated from record highs on Friday as worries about shrinking margins in the tech sector hit the likes of Apple, driving investors into safe-haven bonds ahead of key U.S. inflation data.
Overnight on Wall Street, the technology-heavy Nasdaq Composite tumbled 2 per cent after Cisco Systems posted quarterly adjusted gross margin below estimates as costs of memory chips surged. That drove its shares down 12 per cent and wiped out about $40 billion of its market cap.
The selloff spilled over into tech giants like Apple, which tumbled 5 per cent in the biggest daily drop since April last year when U.S. President Donald Trump's sweeping "Liberation Day" tariffs spooked markets. Transportation companies also got caught up in worries about AI disruption.
"The prevailing tone in markets is a rotation toward more defensive areas of the equity market and companies with steady, less cyclical and more predictable earnings," said Chris Weston, head of research at Pepperstone.
"It is clear that investors are viewing developments in AI and AGI through a new lens, attempting to price a future that feels more uncertain and structurally disruptive than before."
On Friday, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6 per cent, trimming this week's gain to 4.1 per cent. Japan's Nikkei skidded 0.9 per cent, but was still up 5.3 per cent for the week.
Chinese blue chips dropped 0.6 per cent while Hong Kong's Hang Seng index slid 1.5 per cent.
Both Nasdaq futures and S&P 500 were up 0.1 per cent, while EURO STOXX 50 futures climbed 0.2 per cent.
Precious metals attempted to recover from heavy losses. Gold rose 1 per cent to $4,972 an ounce, after losing over 3 per cent on Thursday, while silver climbed 2 per cent to $76.8 an ounce, having plunged 10 per cent overnight.
TRADERS AWAIT US INFLATION TEST
The broad selloff in stocks pushed buyers towards U.S. Treasuries, with the yield on the benchmark 10-year note tumbling 7 basis points overnight, its biggest drop since October 10. It was steady in early Friday trade at 4.1154 per cent.
A very strong auction of the 30-year bonds helped drive longer-term yields lower. 30-year yields slumped 8.5 basis points overnight to 4.728 per cent, its lowest since December 3.
Fed funds futures also rallied to reverse most of the losses after the payrolls data that led markets to pare back the chance of a rate cut in June. A move in June is now back in play, with the chance priced at 70 per cent, and a total easing of 60 basis points is expected this year.
Much attention will be on the U.S. inflation data due later in the day. Forecasts are centred on a monthly rise of 0.3 per cent in the core measure, which is enough to see the annual rate slow to 2.5 per cent from 2.7 per cent previously.
"Even an in-line result would reflect a meaningful deceleration from December and that could bolster animal spirits and spark energy back into the cyclical trade," said Jose Torres, a senior economist at Interactive Brokers.
In the currency markets, the risk-sensitive Australian and New Zealand dollars took a step back. The Aussie was steady at $0.7089, having lost 0.5 per cent overnight, while the kiwi traded at $0.6033, after slipping 0.3 per cent overnight.
Oil prices were flat after a sharp 3 per cent slide overnight on falling demand, easing fears of renewed Middle East conflict and an expected increase in supply.
U.S. West Texas Intermediate crude tacked on 0.2 per cent to $62.95 per barrel, while Brent crude futures edged up 0.2 per cent to $67.65 per barrel.
(Editing by Shri Navaratnam)
