European tech stocks fall after US sell off and Fed warning

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European stocks fell on Thursday, continuing a global sell-off that began after investors pulled out of stocks that had benefited from the pandemic as fears about the economic impact of the Omicron variant faded.

The regional Stoxx 600 index fell 1.2 percent. The Stoxx technology sub-index fell 2%. London’s FTSE 100 index fell 1%.

The moves followed declines in Asian tech stocks. Hong Kong’s Hang Seng Tech Index fell 1.7% on Thursday after falling 4.6% the day before, its largest single-day drop since July. But the gauge had risen 1.4% during afternoon trading in the region.

The city’s larger benchmark, Hang Seng, lost as much as 0.9% in morning trading, but rose 0.7% in the late afternoon.

Meanwhile, the futures markets have indicated that Wall Street stocks are on track for a flat opening.

Those declines followed declines in U.S. markets on Wednesday, as investors gutted shares of tech companies that had surged during the pandemic.

The move was prompted by lessening concerns about the economic impact of the Omicron virus variant, as investors refocused on the prospect of an interest rate hike. US Federal Reserve minutes released on Wednesday said central bank may raise interest rates “sooner or at a faster rate” than officials predicted to fight rising inflation .

The falls were led by the tech-rich Nasdaq Composite Index, which closed down 3.3%, its worst day since February 2021, and a massive sell-off in US Treasuries.

With the rise in yields on US government debt, the attractiveness of many unprofitable companies, some of which had only recently gone public, has taken a hit. Their valuations are dependent on potential future earnings and sensitive to rising rates.

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The 10-year US Treasury yield rose 0.02 percentage points to 1.73% on Thursday, adding to the year-to-date gains.

Hong Kong’s first declines were led by tech and healthcare stocks, with GDS Holdings, a Chinese data center operator, losing as much as 7.8% and BYD Electronic, a maker of cellphone components, losing up to 9.8%.

Other laggards in Hong Kong included video platforms Kuaishou and Bilibili and online health companies JD Health and Alibaba Health Information Technology.

The sell-off followed a punitive year for Chinese tech stocks, with the Hang Seng Tech Index falling nearly a third in 2021 after Beijing launched a broad regulatory crackdown.

Shares of Huarong, the Chinese bad debt manager who received a state-orchestrated $ 6.6 billion bailout last year, fell 25.5% after halving on Wednesday, his first day of listing after a nine-month suspension.

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