Outside the US dollar, it seemed like most everything fell on financial markets on Monday – stockmarkets, bitcoin, commodities such as oil, techs – it was a general retreat that surprised with its thoroughness.
The Australian sharemarket looks like suffering more heavy losses after an overnight futures loss of nearly 100 points (1.3%) on top of Monday’s 1.2% slide.
The Australian dollar fell below 70 US cents as the US currency firmed as investors sought safety in US dollar assets. The Aussie was down almost 2% at 69.48 US cents.
US bond yields touched 3.3% for the 10-year security but eased back a touch to end at 3.04% and looking to dip back under 3% on growing demand from worried investors looking for safety.
US crude oil futures slumped more than 6%, gold lost 1.5%, silver more than 2% and Comex copper dropped 2% on continuing worries about the health of the Chinese economy.
The Dow finished 653.67 points, or 2%, lower at 32,245.70 and dropped by as much as 777 points in the final 15 minutes of trading. Just 7 of the 30stocks in the Dow rose on Monday.
The S&P 500 dropped 132.10 points, or 3.2%, to end at 3,991.24. That’s the first time the index has fallen below 4,000 since April 1 last year.
It was the lowest closing levels for Dow industrials and the S&P 500 since March 9 and March 31, 2021, respectively, according to Dow Jones Market Data.
The Nasdaq again suffered the greatest fall ending 4.3% lower or 521.41 points at 11,623.25. That’s its lowest close since November 10, 2020.
Nasdaq is now down more than 28% from its all-time high of 16,211 last November without any sign that there is a bottom forming for tech stocks to bounce off.
Nasdaq had in fact suffered its biggest three-day point slide on record by the close on Monday.
In Asia, Japan’s Nikkei 225 fell 2.5%, and South Korea’s Kospi lost 1.3%. Stocks in Shanghai inched up 0.1%. The more representative CSI 300 Index (covering the top stocks in Shanghai and Shenzhen) fell 0.8%.
Hong Kong made a mockery of those modest moves, losing 3.8% on the election of pro-Beijing hardline security boss John Lee as the new ruler of the region.
In Europe, France’s CAC 40 fell 2.8%, and Germany’s DAX lost 2.1%. London’s FTSE 100 slid 2.3%.
So why the losses on Monday – the market ended weakly last week, the news over the weekend wasn’t encouraging – cryptos kept falling, Bitcoin slumped badly on Monday as a result. It fell 7.7% on Monday, taking the fall since the start of April to 29% and more than 50% from its high last November.
So much for all the bullishness about Elon Musk, Twitter and cryptos.
Speaking of Elon Musk, shares in his Tesla electric vehicle and battery company fell more than 9%, shares in his takeover target, Twitter slid another 3.7% to end at $47.96. That’s more than 11% under his $US54.20 a share offer for the short message social media platform.
Rivian, the electric truck startup and a brief darling in 2021 for lucky shareholders and early supporters like Ford and Amazon, has already helped destroy their March quarter earnings with a massive share price fall. On Monday it added to that pain, sliding another 20.9%. That leaves them down around 64% since the float at $US78 a share last November and an initial value of $US77 billion – it was valued at just $US20.3 billion at Monday’s close.
Consumer stocks like Nike suffered along with industrials such as Caterpillar. Bank stocks also came under pressure with Bank of America falling 2.8%.
Boeing marked the biggest loser in the Dow, plunging more than 10% followed by energy bellwether Chevron which slipped 6.7% as US oil futures fell sharply.
Among the Dow stocks, 3M (up 1.9%), Walmart (up 1.17%), Amgen (up 1.16%) and Home Depot (up 0.9%) posted gains despite the broader sell-off. Target, another big retailer, saw a small fall.
…………
Wall Street’s megatechs are shedding market value at an unprecedented rate in the wake of the Fed’s 0.50% rate rise last Wednesday, losing more than $US1 trillion in value in just the last three trading sessions.
(And over a longer timeframe, the losses sustained by cryptocurrencies have been huge as the asset class starts to track more closely the movement of Nasdaq and to a lesser extent, the S&P 500).
While the wider market has fallen, many non tech stocks have been dragged lower by the slump in the price of Apple, Meta, Alphabet, Amazon, Microsoft Netflix (already weak) and others.
Suddenly long-time consumer staples and steady industrials – like Kellogg, 3M, Walmart, Home Depot, jam maker J Smucker, General Mills (another cereal maker) and Campbell Soup, are back in favour.
Apple shares have shed $US220 billion since last Wednesday, Microsoft shares are down $US198 billion in value as well, Tesla has lost $US199 billion, and is now worth less than $US800 billion. It is down 25% year to date.
Amazon has lost $US173 billion (remember it lost $14 billion in a day when it released weak results in late April). Alphabet shares are down $US123 billion. Meta shares has seen a $US70 billion loss and shares in the graphics card maker, Nvidia have dropped $US85 billion.
Netflix shares have lost 6% or more than $US13 billion and is now worth just $US77.9 billion. A month ago, as it prepared to report its march quarter earnings, it was worth more than $US154 billion.
Shares in Berkshire Hathaway, Apple’s largest shareholder, have lost more than $US40 billion in value as the shares have followed Apple lower. That’s despite the company continue to spend heavily buying shares in Occidental Petroleum to cement its position as the largest shareholder in the energy mini-major.
Gains have been few – J Smucker shares are up 4% since the close last Wednesday, General Mills shares have risen around 3%, Kellogg shares are up around 10%, Campbell Soup shares have gained 7%. Walmart shares are down around 2%.
Wall Street and many other markets were led higher by techs that because bigger techs and then megatechs. They are now shrinking techs and the shares that have gained or done relatively well are not market leaders and can offer no protection for investors trying to protect whatever gains they still have.
And then there are the losses held holders of cryptocurrencies. CNBC reported Monday that 40% of bitcoin holders alone are now underwater, including most of those who bought this year.
The Financial Times also quoted a study showing the top cryptos had lost $US1.6 trillion in value since the highs of last November – when bitcoin peaked.
“The market value of the top 500 digital assets has tumbled 50 per cent from the record peak reached in November 2021 to $1.6tn, CryptoCompare data collated by the Financial Times show. Bitcoin, the world’s biggest digital token, has also lost half its value over the period.
“The crypto slump comes as investors dash out of speculative financial assets after a wave of rate rises by global central banks sparked ructions across markets. Other risky assets like shares in lossmaking companies and junk bonds have also come under pressure, but crypto markets have sustained a particularly intense blow.
“This is a risk off across all asset classes including crypto,” said Daniel Ives, strategist at Wedbush Securities, who added that there is “nowhere to hide.”
