Growing fears over tech valuations trigger downward slide in markets
Investors seek safety in bonds as tech shares take another battering on Wall Street
Technology stocks led sectoral falls with a 1.9 per cent decline, echoing moves in the United States.
Global equity markets fell today as fears on Wall Street about over-stretched stock valuations spread to Asia and Europe, pushing investors to the safety of bonds.
The Nasdaq composite, which has been pounded in recent days as investors bailed out of high-flying technology and biotechnology shares, slipped again today.
The index on Thursday recorded its biggest drop in two-and-a-half years.
The benchmark S&P 500 index was also lower and was on target for its worst week since January.
The Nasdaq biotech index , after falling more than 20 percent from a recent high, rose 0.4 per cent. Benchmark 10-year Treasuries notes were tracking the losses in stocks.
“This equity market meltdown has brought a ‘fear’ bid into bonds,” said Larry Milstein, head of government and agency trading at RW Pressprich in New York. A benchmark of global equities fell to a two-week low, spurred by a broad risk-averse tenor among investors that led to sell-offs in higher-yielding currencies and emerging market assets.
“There’s been contagion from the correction in the US which is probably not over. But the fact is, this is mostly a US correction,” said David Thebault, head of quantitative sales trading at Global Equities in Paris. “People are getting out of overvalued sectors and looking for bargains elsewhere.
The market’s positive longer-term trend is still intact, this pull-back will just remove the froth,” he said. The slide in global equities persisted in the wake of disappointing quarterly results from JPMorgan , the biggest US bank.
This exerted more pressure on the benchmark Standard & Poor’s 500 index, which on Thursday suffered its biggest one-day drop in two months. Shares of JPMorgan sank 3.1 percent to $55.63, and the S&P financial index lost 0.6 percent and was the worst performing S&P sector.
MSCI’s all-country world equity index fell to lows last seen in late March and was last trading down 0.7 per cent. European technology stocks led sectoral falls with a 2.5 per cent decline, echoing US declines.
The tech sector in Europe had rallied more 40 per cent since November 2012 through the start of April.
The pan-European FTSEurofirst 300 of leading regional shares closed down 1.4 per cent at 1,312.92. The Dow Jones industrial average fell 85.64 points or 0.53 per cent, to 16,084.58, the S&P 500 lost 7.99 points, or 0.44 per cent, to 1,825.09, and the Nasdaq Composite dropped 20.664 points, or 0.51 per cent, to 4,033.443.