Economy

Wall Street dives, setting the ASX up for heavy losses at open

Wall Street dives, setting the ASX up for heavy losses at open

US stock index futures were down slightly late Wednesday after they resumed trading for the overnight session.

The losses were widespread, and stocks that have been the biggest winners on the market the last few years, including technology companies and retailers, suffered steep declines.

"It's a risk-off environment as investors are focusing on spiking yields and taking profits off the table as they are concerned about whether the bull market is actually coming to an end", said Ryan Nauman, market strategist at Informa Financial Intelligence in Zephyr Cove, Nevada.

But a recent International Monetary Fund warning on global growth taking a hit from trade disputes has hit confidence in the stock market, as has US Treasury yields at more than 7-year highs, signalling a tightening of capital globally.

Elsewhere, shares of Sears plummeted more than 37% after reports the cash-strapped retailer could file for bankruptcy protection as soon as this week.

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.

The Dow's point decline was the worst since February, when the index fell by more than 1,000 - twice. The Dow Jones fell by more than 500 points, a drop of nearly 2pc, while the wider S&P 500 index fell for a fifth day straight, its worst run in nearly two years.

Wall Street stocks plunged Wednesday, with major indices losing more than three percent in a selloff prompted by the sudden jump in USA interest rates.

More news: Euro Plummets Near Seven Week Low On Italy Budget Distress

Some of America's biggest tech stocks were caught up in the sell-off, with Netflix (Xetra: 552484 - news) down 8%, Microsoft (Euronext: MSF.NX - news) sliding 5%, Amazon off by 6% and Google's parent company Alphabet (Xetra: ABEA.DE - news) down 5%.

The CBOE Volatility Index, Wall Street's "fear gauge", rose 2.5 points, gaining for the fifth straight session to hit its highest since June 25.

All 30 Dow stocks were in the red, sending the index below 26,000 points for the first time in a month. Ltd. fell 3.2 per cent, to a one-year low.

After a long stretch of relative calm, the stock market has suffered sharp losses over the last week. Brent crude, the global standard, lost 2.2 per cent to $83.09 a barrel in London. Natural gas rose 0.6 percent to $3.28 per 1,000 cubic feet.

The S&P 500 fell 54 points, or 1.9 percent, to 2,825. Technology stocks fell especially sharply.

USA gold futures settled up $1.9, or 0.16 percent, at $1,193.4. The Japanese yen strengthened 0.53 percent versus the greenback at 112.36. The Nasdaq composite fell 152 points, or 2 percent, to 7,585.

The S&P 500 fell 39 points, or 1.4 percent, to 2,840. Investors see many of these countries as being vulnerable to higher US interest rates, which can pull away investment dollars. Brazil's Bovespa lost 2.5 percent and the Merval in Argentina sank 2.2 percent. The stock fell 15 per cent to 50 cents. The British pound rose to $1.3197 from $1.3146.


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