Another weak start for the ASX today after Wall Street ended weakly on Friday but ended lower ahead of a three day weekend.
The overnight futures market closed with a loss of 38 points early Saturday, Sydney time after Wall Street’s red end to the week.
Friday saw the ASX sell-off heavily with the index losing more than 3% or over 187 points – that was a loss of more than $60 billion in value.
US markets are closed tonight for the labour day holiday today (which marks the end of summer and the start of the US fall and winter sessions).
A big worry that emerged on Friday was confirmation of highly unusual options dealing by big Japanese tech investor.
The Financial Times (FT) and others media reported that options trading by Japan’s Softbank had inflated mega tech stock values in the last couple of weeks.
Softbank reportedly bought lots of call options which forced the option sellers to go into the market to buy shares to back their deals in case Softbank exercised the options.
This buying pushed up the value of Apple, Amazon, Tesla, Microsoft, Facebook, and other big techs. Don’t be surprised in US regulators investigate.
Europe’s STOXX 600 index lost 1.13% to close down 2.03% on the week. MSCI’s gauge of stocks across the globe shed 0.95% to end the week for the index’s biggest weekly percentage drop since mid-June.
Local tech stocks will again be hit with Nasdaq taking another pounding on Friday and setting itself up for another mauling this week after Tesla failed to be added to the S&P 500 index, the most important stock market measure in the world.
Tesla shares fell more than 6% in after-hours trading (See separate story) and that will make for a nervy holiday Monday in the US and here.
Adding to the pressure will be another big bank sell-off by Warren Buffett’s Berkshire Hathaway (see separate story). The sale of more shares in Well Fargo, on top of the sale of a host of bank and financial stocks in the June quarter, is a message that the world’s highest-profile investor has lost interest in the sector, although not totally.
Berkshire has built the biggest stake (11.8%) in Bank of America, the second-largest US bank.
Friday saw the Dow close down 159.42 points, or 0.6%, at 28133.31, after falling 628 points at its session low. The blue-chip gauge bounced in the final hour of trading, briefly pushing back into positive territory before falling back.
The S&P 500 index lost 28.10 points, or 0.8%, to finish at 3,426.96, while the Nasdaq declined 144.97 points, or 1.3%, to end at 11,313.13.
The tech-heavy Nasdaq saw a 3.3% weekly decline, its largest since March, while the Dow fell 1.8% and the S&P 500 lost 2.3%.
Friday’s losses came a day after the Dow ended with a loss of 807.77 points, or 2.8%, at 28,292.73, after dropping more than 1,000 points at its session low.
The S&P 500 shed 125.78 points, or 3.5%, at 3,455.06. The Nasdaq slumped 598.34 points, or 5%, to end at 11,458.10.
The declines marked the biggest one-day drops for all three indexes since June.
The S&P 500 rose 7% last month for its strongest August in 34 years, then added another 2.3% in the first two days of September to hit another record high before Thursday’s slide and Friday’s follow up.
Falls in some key S&P 500 sub-indexes were bigger than the overall fall. For example, the S&P 500 index tech sector fell 1.3% Friday, while the similarly popular communications services sector gave back another 1.9% and consumer discretionary stocks fell 1.4%.
After Friday though, the Nasdaq is still up 83% since March 23 and the S&P is up 63%.
Mega-cap companies such as Apple, Microsoft Inc, Amazon, and Facebook also pared losses through the session after the early slump. But of that group only Apple managed a very tiny gain for the day.
Wall Street initially liked the August jobs report but soured when it realised job growth slowed in August as financial aid from the government ran out, with non-farm payrolls increasing by 1.371 million jobs versus 1.734 million in the prior month.
Expectations were for the addition of 1.4 million jobs. The unemployment rate fell to 8.4% from 10.2%.
