Asian shares fall as Facebook data flap spooks tech stocks

A man looking at an electronic stock quotation board outside a brokerage in Tokyo, Japan, on Feb 9, 2018.
A man looking at an electronic stock quotation board outside a brokerage in Tokyo, Japan, on Feb 9, 2018.PHOTO: REUTERS

TOKYO (REUTERS) - Asian shares fell on Tuesday (March 20) as investors dumped high-flying US technology shares on fears of stiffer regulation as Facebook came under fire following reports it allowed improper access to user data.

The retreat came as investors braced for US President Donald Trump could impose additional protectionist trade measures.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.2 per cent. Japan's Nikkei fell 1.0 per cent.

On Wall Street the S&P 500 lost 1.42 per cent and the Nasdaq Composite 1.84 per cent, both suffering their worst day in five weeks.

"Investors lightened their positions ahead of the Fed's policy meeting. The markets are completely split on whether the Fed will project three rate hikes this year or four," said Hiroaki Mino, senior strategist at Mizuho Securities.

Facebook led the losses, tumbling 6.8 per cent as the social media colossus faced demands from US and European lawmakers to explain how a consultancy that worked on President Donald Trump's election campaign gained improper access to data on 50 million Facebook users.

In addition, worries about the potential for a US-China trade war cast a shadow after US President Trump imposed tariffs on steel and aluminium and suggested punitive tariffs on some US$60 billion worth of Chinese information technology, telecoms and consumer products annually.

The sharp fall in share prices put a lid on long-term US bond yields while short-dated yields rose ahead of an expected rate hike from the US Federal Reserve after its two-day policy meeting starting on Tuesday.

The yield on 10-year Treasuries was 2.845 per cent, little changed on the week and about 10 basis points below the four-year high of 2.957 per cent touched a month ago.

But the yield on two-year notes hit a 9 1/2-year high of 2.32 per cent as the Fed appears set to bump up its policy interest rates to 1.50-1.75 percent from the current 1.25-1.50 per cent.

But with a Fed rate rise already fully priced in, the US dollar barely gained from the prospect of a rate hike.

Instead it was the euro that stole the spotlight after Reuters reported that European Central Bank officials were shifting their debate from bond purchases to the expected path of interest rates.

The euro rose toUS$1.2338, bouncing back from US$1.2258 hit the previous day.

The British pound hit one-month high of US$1.4088 after Britain and the European Union agreed to a 21-month post-Brexit transition period and a potential solution to avoid a "hard border" for Northern Ireland.

It was last at US$1.4024.

The yen was little changed at 106.01 per dollar.

Oil prices barely moved as investors remained wary of growing crude supply although tensions between Saudi Arabia and Iran provided some support.

Brent crude futures traded at US$66.19 a barrel. US West Texas Intermediate (WTI) futures were US$62.16 a barrel.