Another weak start for the ASX – not as dramatic as Thursday with the 100 point slump at the start, but something around 30 points if the second big slide on Wall Street in as many days is any guide.
The ASX 200 futures trading overnight had the index off around more than 40 points after US markets again saw red ink, and more of it as trading headed towards the close.
Asian markets will also open weaker as well after Thursday’s 3% to more than 5% slump (especially in China).
For the second day in a row, Wall Street fell heavily as bonds pared back some of their losses on Thursday. The yield on the key 10 year US Treasury bond ended at just over 3.14% – it was above 3.26% on Monday.
Yields have been falling as investors switch from equities to bonds with the stepped-up demand having its usual impact on yields when ’safe haven’ investments are sought out by nervy investors.
The S&P 500 fell 57.31 points, or 2.06%, to around 2,728.37. The Dow shed 545 points, or 2.13%, to 25,091 and The Nasdaq slipped 93 points, or 1.3%, to 7,329.06
The S&P logged its sixth straight decline, marking its longest losing streak since November. The tech-skewing Nasdaq fell into correction territory, (defined as a 10% decline from its record closing high).
This came after the Dow and S&P posted their biggest one-day drop since February on Wednesday. The Dow has dropped nearly 1,400 points in two days.
Nasdaq’s slide was based on the reining in of overstretched valuations on the megatechs – the so-called FAANG stocks in the shape of Facebook, Apple, Alphabet, Netflix and Amazon, along with the now tech veteran, Microsoft.
They did better on Thursday than Wednesday when we saw falls of 2% to more than 8%. Facebook was the only one to rise on Thursday, up 1.3% while small falls came from Apple (down 0.88%), Microsoft (down 0.2%), Alphabet (down 0.2%), Netflix (off 1.4% after the 8% plus fall on Wednesday) while Amazon dipped further into correction territory with a fall of 2%, the largest of the group.
Thursday’s sell-off was most pronounced in Asia, where the rising trade tensions between the US and China have hit technology stocks particularly hard. Chinese online powerhouse Tencent closed down nearly 7%, taking it 44 percent lower since January. It also canceled its global IPO for its music business.
The semiconductor-heavy Taiwan exchange was down 6.3%, its worst one-day drop in a decade.
Sparked by heavy losses a day earlier on Wall Street, the Europe-wide Stoxx 600 tumbled 1.6%, its worst day in four months, to its lowest levels since the end of 2016, while emerging markets slid 2.7% to take their overall decline since the start of the year to more than 17%. Japan’s Topix index fell 3.5%, its largest one-day fall since March, with technology companies losing 4% and the Nikkei shed 3.9%.
Companies listed in China slumped by almost 5%, while in Hong Kong, stocks shed 3.5%.
Gold futures prices gold jumped 2.9% on Thursday – the most in nearly 2 years – a sign of safe haven buying amid a rout in global stock markets.
The move is a sharp turnaround to gold’s recent performance. Gold had fallen by 10% before Thursday’s move higher, hit by the stronger US dollar and rising US interest rates.
The Australian dollar edged back over 71 US cents to close at 71.22 this morning.
Comex December gold jumped $US34.20, or 2.9%, to settle at $US1,227.60 an ounce—the highest finish since the start of August for a most-active contract, according to FactSet data. Comex December silver rose 28 cents, or nearly 2%, to $US14.606 an ounce. Copper eased half a percent.
Oil prices fell – Brent crude futures fell in Europe by 3.4% to settle at $US80.26 a barrel — having dropped by as much as 4% to $US79.80 a barrel earlier in the session. In New York, West Texas Intermediate, the dropped 3% at $US70.97 a barrel — having declined as much as 3.6% in the day — for its worst day since August.
US oil stocks were higher than expected in the weekly report from the Energy Information Administration and the latest Hurricane had no impact whatsoever on oil prices, despite the trail of damage through northern Florida.
Warren Buffett’s Berkshire Hathaway was down another 3.7% after Wednesday’s 4% plus sell off… that’s valuation worries about the Apple holding and some storm damage fears thrown in from the latest hurricane in the Gulf/Florida area … Apple was only off 0.88%.
The market’s strength will be tested tonight with the third quarter earnings reports from three of America’s biggest banks – JPMorgan, Citi and Well Fargo. Any weakness in the figures they present will send shudders through the market, but solid results could help calm shaken investors nerves.
