Published: Thu, October 11, 2018
Economy | By

Dow industrials sink 831 points as tech companies plunge

Dow industrials sink 831 points as tech companies plunge

Here are five things to watch ahead of Thursday's US open.

Locally, ASX futures are trading significantly lower, down 97 points (1.6 per cent), which means the heavy selling in foreign markets will extend to the Australian share market when it opens today.

At the closing bell, the Dow Jones Industrial Average had lost 3.1 percent or 830 points to finish at 25,613.35, in the biggest fall since February.

After a long stretch of relative calm, the stock market has suffered sharp losses over the last week as bond yields surged. Nasdaq composite, which has a high concentration of technology stocks, tumbled 244 points, or 3.2 per cent, to 7,495.

The S&P 500 closed at 2,785.68 for a loss of -94.66 points or -3.29%.

Whether the lower reading will quell expectations the Federal Reserve will hike interest rates again in December remains to be seen, said Yousef Abbasi, global market strategist at INTL FCStone in NY.

USA stocks are plunging toward their worst loss in six months on Wednesday as technology companies continue to take sharp losses.

Wall Street is hoping that the worst of a brutal correction will soon be over, but today's not looking much better after Wednesday's big plunge.

Technology stocks slid more than 2 percent, the most among the 11 major S&P sectors, with the Philadelphia Semiconductor index down 3 percent after Swiss vacuum valve maker VAT Group said demand from chip equipment makers was softening. "That potentially gets us to rally", Abbasi said.


The 10-year yield is now 3.20 percent, the highest in than seven years and up sharply form 2.82 percent in late August. In the previous session, the stock jumped 15 per cent on a Globe and Mail report that Altria Group was in talks for acquiring a stake.

It will take more than a daily stock market correction to stop the Fed from hiking, said George Goncalves, managing director and head of fixed income strategy at Nomura in NY.

Gold rose 0.2 per cent to $1,193.40 an ounce.

Japan's Nikkei 225 added 0.2 percent, South Korea's Kospi dropped 1.1 percent and the Hang Seng in Hong Kong gained 0.1 percent.

Stocks and bonds traditionally have been in a tug of war for capital, but for the past 10 years bonds have had one arm tied behind their back, said Jack Ablin, chief investment officer and founding partner at Cresset Wealth Advisors in Chicago. Bond yields move in the opposite direction to price. Jitters about those companies have led to this short-term fall, too, while drops were felt throughout the market.

An ongoing conflict between Washington and Beijing weighed on large-cap industrial stocks, including Boeing (-2.5%) and Caterpillar (-1.6%).

Netflix shares fell by 6pc and have now fallen by 12pc in the last five days.

The dollar slipped to 112.17 Japanese yen from 112.27 yen late Wednesday.

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