ASX set to dive as Wall Street's tech plunge continues

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The Dow Jones fell 2.3 per cent, the S&P 500 lost 2.8 per cent and the Nasdaq dropped 4.1 per cent. At 6.22am AEST, futures are pointing to a fall of 97 points, or 1.6 per cent, for the ASX at the open. On Tuesday, the ASX gained 1.1 per cent.

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Energy shares slumped 3.7 per cent as oil prices fell below $US40 a barrel.

Media reports of SoftBank’s option purchases also reminded investors that market makers might have billions of dollars’ worth of long positions as hedges against options trades.

Wall Street’s rally, which has been fuelled in large part by massive amounts of monetary and fiscal stimulus, screeched to a halt last week with the Nasdaq falling as much as 9.9 per cent from its intraday record as investors booked profits after a run that lifted the index about 70 per cent from its pandemic lows. Tuesday’s losses put the index down 10 per cent from its closing record, confirming a correction began on September 2.

At session lows on Tuesday, Facebook, Amazon.com , Apple, Tesla, Microsoft, Alphabet and Netflix had collectively lost more than $US1 trillion ($1.4 trillion) in market capitalisation since Sept. 2.

Tesla plunged 21.1 per cent to suffer its biggest daily percentage drop as the electric-car maker was excluded from a group of companies being added to the S&P 500. Investors had widely expected its inclusion after a blockbuster quarterly earnings report in July. Up to Friday’s close, the stock had surged about 400 per cent this year.

JPMorgan Chase & Co fell 3.5 per cent, after a report it was probing employees who were allegedly involved in the misuse of funds intended for COVID-19 relief. The wider banks index lost 3.4 per cent, also tracking Treasury yields.

A gauge of value stocks fell 1.8 per cent, but outperformed the broader market and a 3.4 per cent, decline in the growth index . Wall Street’s fear gauge climbed for the third time in four sessions.

Concerns over potential US sanctions against China’s biggest chipmaker, SMIC, hit domestic suppliers, with the PHLX semiconductor index down 3.4 per cent.

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General Motors jumped 7.9 per cent after it acquired an 11 per cent stake worth $2 billion in U.S. electric-truck maker Nikola. The truck maker’s shares surged 40.8 per cent.

Declining issues outnumbered advancing ones on the NYSE by a 3.78-to-1 ratio; on Nasdaq, a 2.22-to-1 ratio favoured decliners.

The S&P 500 posted no new 52-week highs and 2 new lows; the Nasdaq Composite recorded 31 new highs and 49 new lows.

Volume on US exchanges was 10.48 billion shares, compared with the 9.32 billion average for the full session over the last 20 trading days.

Reuters

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