(Bloomberg) – Nasdaq 100 futures technology stocks are showing higher losses as investors question whether valuations have reached a critical level. European stocks fell and the pound weakened for the fifth day.
Tesla Inc., Apple Inc. and Microsoft Corp. fell in US pre-market trading, and Nasdaq Futures fell 3%. Traders sought the security of heavenly possessions, strengthening the dollar by reducing treasury yields. Oil reached $ 40 a barrel in London and gold fell.
After technology stocks led a powerful rally from the epidemic, investors have recently become obsessed with the fact that spec fever has gone too far. Tesla fell 13% on Tuesday after approving the carmaker for the S&P 500, and this year the stock is up another 400%.
US-China relations have also resurfaced, with President Donald Trump saying he plans to end US dependence on the country. Trump has threatened to punish any American companies that create jobs abroad and ban those doing business in China from winning federal contracts.
Trump has vowed to drastically withdraw US economic ties with China
“The path of least resistance for the market might be testing the negative,” said Peter Chatwell, head of multi-asset strategy at Mizuho International PLC. “Ultimately, I suspect that if there are more sales, real money investors will take the opportunity to drown.”
In the UK, the pound weakened and stocks slowed after Prime Minister Boris Johnson pledged not to back down on sticky issues in Brexit trade talks with the EU.
Shares of Royal Mail PLC, a privatized British postal service, rose 20%, saying it wanted to correct its business and shift the service to the parcel market. EasyJet PLC slowed down after discount airlines said flight demand was lower than expected.
Elsewhere in the markets, the Turkish lira weakened to an all-time low against the dollar for the fourth session, amid concerns that monetary policy may be too loose to push the currency back.
Equities rose in Asia, with shares leading in Australia and South Korea.
Here are some important events:
The ECB will probably have rates on Thursday, but the negative risks have intensified, suggesting further easing is possible ahead of the year. CPI data is coming in on Friday, with consumer prices expected to rise for the third month in a row in August.
The major movements in the markets are:
Futures fell 1.4% in the S&P 500 Index at 9:12 am New York time. Stocks Europe 600 Index fell 0.3% .MSSCI Asia Pacific Index rose 0.1% .MSSCI Emerging Market Index declined 0.6%.
The Bloomberg Dollar Spot Index rose 0.6% to close at 1.1794. The British pound fell 1% to 30 1.3033. The Japanese yen rose 0.3% to 105.98 against the dollar. Offshore yuan weakened 0.2% to 6.8495.
Yields on ten – year treasuries fell four basis points to 0.68 per cent .Yields on two – year treasuries fell less than one basis point to 0.14 per cent .Germany’s 10-year yields fell three – -0.50 per cent .Britain’s 10-year yields fell 7.19 per cent. ‘S 10-year yield fell by less than 0.04 percentage points.
West Texas Intermediate crude fell 6% to $ 37.13 a barrel. Brent crude fell 5.2% to $ 40.15 a barrel. Gold weakened 1.1% to $ 1,912.50 an ounce.
(The previous version of this story corrected the second paragraph to say that the Treasury yield fell instead of the rose.)
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