U.S. stocks are opening broadly lower, extending a weak streak into a third day. The price of Bitcoin dropped another 20% Wednesday, extending a sharp pullback in crypto assets over the past month, after China’s banking association issued a warning over the risks associated with digital currencies. Big Tech companies extended their declines on Wall Street. Amazon, Apple and Microsoft each fell more than 1%. Coinbase, a cryptocurrency exchange operator that had an IPO last month, dropped 8%. The drop in Bitcoin follows a recent reversal by longtime Bitcoin advocate Tesla, which now says it will no longer accept Bitcoin as payment for cars.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
TOKYO (AP) — Global shares fell Wednesday, tracking a decline on Wall Street that was led by big technology stocks. The price of Bitcoin sank again after the China Banking Association warned of risks associated with digital currencies.
France's CAC 40 fell 0.9% in early trading to 6,296.63, while Germany's DAX plunged 1.2% to 15,207.22. Britain's FTSE 100 dropped 1.3% to 6,943.01. U.S. shares were set to drift lower with Dow futures falling 0.7% to 33,770.0. S&P 500 futures were down 0.8% to 4,089.75.
Japan's benchmark Nikkei 225 fell 1.3% to finish at 28,044.45, as continuing worries about the latest surge in coronavirus cases, including variants, dampened investor sentiment. Australia's S&P/ASX 200 slipped 1.9% to 6,931.70. The Shanghai Composite slipped 0.5% to 3,510.96. Markets were closed in Hong Kong and South Korea.
Japan's government-backed “state of emergency” is continuing for several areas, including Tokyo and Osaka, through the end of the month. But cases are growing in other regions, heightening concerns. The southern island prefecture of Okinawa requested it get added to the areas under emergency, as cases surged.
Japan has one of the slowest vaccine rollouts in the developed world, with about 2% of the population fully vaccinated. It has recorded more than 11,000 COVID-related deaths.
A day after Japan reported its economy contracted at a 5.1% annual rate in the first quarter of this year, Fitch Solutions forecast the economy will grow just 2.5% this year, highlighting the challenge as the country battles surging coronavirus infections.
“The slow vaccination roll-out in the country means that the country continues to face risks from sporadic movement restrictions and other tightening measures that will disrupt a healthy recovery in activity," the report said.
The Tokyo Olympics, due to start in late July, will be held in such a reduced capacity, “the positive economic gains from the event will likely be negligible," it said.
Bitcoin's price fell more than 9% on Wednesday to about $39,000 after the China Banking Association warned members of risks associated with digital currencies. By late Asian time it was down 5.9% at $40,625.
A statement posted on the industry association's website said all members should “resolutely refrain from conducting or participating in any business activities related to virtual currencies."
The notice, which was reiterating longstanding government policy, said such digital currencies were subject to great volatility.
Bitcoin was trading above $50,105.00 last week after its price plunged 10% following Tesla CEO Elon Musk's reversal of his stance on the digital currency when he said the electric car maker would no longer accept it as payment.
Shares made solid gains earlier in the year as investors bet on an economic recovery fueled by widespread vaccinations. Expectations were high for corporate earnings and the latest round of results has been surprisingly good.
A big question is whether rising inflation will be temporary or whether it will endure. Prices are rising for everything from gasoline to food as the economy recovers from its more than year-long malaise.
The fear is that the Federal Reserve will have to dial back its extensive support if inflation persists. That includes record-low interest rates and the monthly purchase of $120 billion in bonds meant to goose the job market and economy. For all the worries about inflation, however, many professional investors are echoing the Federal Reserve in saying that they expect rising prices to be “transitory.”
Higher interest rates drag on most of the stock market, but they are particularly painful for stocks, especially technology shares, considered the most expensive and those bid up for profits expected far into the future.
In energy trading, U.S. benchmark crude fell 91 cents to $64.58 a barrel in electronic trading on the New York Mercantile Exchange. It lost 78 cents to $65.49 on Tuesday. Brent crude, the international standard, lost 85 cents to $67.86 a barrel.
In currency trading, the U.S. dollar edged up to 109.08 Japanese yen from 108.89 yen. The euro inched down to $1.2224 from $1.2226.