Logo of Phnom Penh Post newspaper Phnom Penh Post - Equities tumble as Wall Street rout spreads

Equities tumble as Wall Street rout spreads

Equities tumble as Wall Street rout spreads

Technology and energy firms were among the big losers on Wednesday as Asian investors ran for the exit following another rout on Wall Street, while the delay of a promising vaccine trial fanned fears a fix could take longer than hoped.

US traders returned from a long weekend to resume the selling that sent shudders through markets last week, as they fretted over the lofty valuations of many equities that have soared from their March troughs, helped by vast central bank support.

Last week’s retreat was centred on tech giants including Apple, Microsoft and Tesla – bringing the Nasdaq’s succession of record highs to a juddering halt – but analysts said the latest selling was broadening out.

“We don’t know exactly if this is the bottom, there could be more volatility,” Laila Pence, at Pence Wealth Management, told Bloomberg TV. “We’re taking the froth out of the market.”

Tuesday’s blood-letting in New York once again saw Apple and Microsoft in the firing line, though the standout was Tesla, which collapsed 21 per cent – its worst day on record.

The Nasdaq, which had risen around 80 per cent from its lows this year, is now officially in correction having lost more than 10 per cent from its recent high on September 2.

And the red ink seeped into Asia, with Tokyo, Shanghai, Seoul, Mumbai, Manila and Wellington all down more than one per cent, while Sydney and Jakarta shed more than two per cent. Hong Kong, Singapore and Taipei were also in negative territory.

In Tokyo, SoftBank dived more than seven per cent at one point on worries about its exposure to tech giants after it was revealed the conglomerate had made huge derivative bets ahead of the latest sell-off. It pared the losses, but is still down around 10 per cent this week so far.

While technology firms in the region were taking a hiding, energy firms were also in the cross-hairs after oil prices suffered their heaviest losses since the early days of the pandemic.

The commodity was in retreat on concerns about demand as the global recovery stutters and after the US summer holiday season – when people traditionally take to the road – came to an end.

There are fears that the Organisation of the Petroleum Exporting Countries (Opec) will begin picking up production soon, after an output cut put in place to support the market earlier in the year.

Both contracts edged up slightly on Wednesday.

JP Morgan Asset Management strategist Kerry Craig said: “Selling pressure is a little broader as the concerns in the tech sector are extending across broader markets and impacting risk sentiment.

Traders were also fretting over the possibility that trade talks between Britain and the EU will end without a deal after Prime Minister Boris Johnson said that if an agreement was not struck by October 15 then there would not be one.

Later, it was confirmed that the head of the UK government’s legal department had resigned over Johnson’s last-minute changes to Britain’s EU Withdrawal Agreement, which Northern Ireland Secretary Brandon Lewis admitted broke international law in “tightly defined circumstances”.

London opened with small gains but the pound extended losses having dropped on Tuesday below $1.30 for the first time in a month. It has now shed more than four per cent this month.

Paris and Frankfurt were also slightly higher.

Stephen Innes at Australia-based AxiCorp Financial Services Pty Ltd said: “I am astonished that we are still talking about Brexit, four years, two months, and 17 days after the referendum.

“It is beyond stupid at this point and the rhythmic sound of traders bashing their heads against their keyboards suggests they too were far too complacent as the pound remains in a world of hurt.”

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