Wall Street plunges amid tech stock sell-off
WALL STREET suffered its biggest fall since February last night as a selloff in technology giants and interest rate worries left the benchmark Dow Jones index nursing a 832 point fall.
The US blue-chip index dropped 3.2pc to end at 25,598.7, while the wider S&P 500 fell 3.3pc to 2,785.68, down for the fifth day straight. In London the FTSE 100 closed at a six-month low.
Shares in Facebook, Amazon, Apple, Netflix and Google’s parent company Alphabet – the so-called “Faang” stocks that have driven US markets to all-time highs recently – all fell in New York trading, with the tech-dominated Nasdaq index recording its worst day since 2016, falling 4pc.
Rising government bond yields have made them more attractive, leading investors to pull out of equities. US 10-year Treasuries hit a seven-year high of 3.26pc yesterday. Concerns about consumer spending have also led to jitters as US companies prepare to unveil third-quarter results.
Netflix shares fell by 8pc while Amazon, Apple, Alphabet and Facebook all dropped by between 4.6pc and 6.5pc. Snap, the parent company of the messaging app Snapchat, fell 5.9pc and sank to a new all-time low. Compounding the drop, the US government announced plans for tougher oversight of foreign investment in US tech companies.
WALL STREET is on its longest losing streak since Donald Trump’s election after rate-rise fears threatened to spark a rerun of February’s global stocks rout.
The S&P 500 racked up a fifth day in the red after the producer price index – a key inflation indicator that tracks wholesale prices before they reach consumers – climbed for the first time in three months.
Signs of building inflationary pressures forcing the Federal Reserve to keep up the brisk pace of interest rate rises well into 2019 re-energised a global stocks rout that spilt over from the end of last week.
After London closed, the sell-off on Wall Street gained pace, with the Dow
Jones ending down 3.2pc amid concerns over higher borrowing costs and global growth.
The FTSE 100 edged closer to a second correction of the year. Its first in February was also ignited by fears of tightening policy at the US central bank. London’s benchmark index sank 91.85 points to 7,145.74 to hit a fresh six-month low, leaving it approximately 50 points away from correction territory – when an index falls more than 10pc from its 52-week high. As attention started to turn to today’s crucial CPI data in the States, which could give fresh impetus to the slump, the Dax in Frankfurt dropped 2.2pc while the Euro Stoxx 50, which tracks the top eurozone stocks, nosedived 1.7pc.
The luxury goods sector led the sell-off in Europe after LVMH confirmed that Chinese customs officials are tightening border checks.
Trench coat maker Burberry suffered its biggest plunge in 10 months after its rival confirmed speculation of a crackdown on tourists bringing back unauthorised luxury goods from overseas.
China’s efforts to repatriate consumer spending added to fears of slowing demand in the crucial market for the sector, knocking Burberry 152p to £17.28, a 9.1pc fall.
Elsewhere, Dixons Carphone bucked the stocks slide after HSBC told clients that the electronics retailer is on the “road to redemption” ahead of an expected strategy reboot in December.
Analyst Andrew Porteous argued in an upgrade to “buy” that Dixons must make its troubled Carphone Warehouse model “work or exit”. He also praised management’s long-term incentive plans switching their focus to cash generation. Dixons rallied away from a 10-month low, climbing 5.8p to 159.3p.
Paper and packaging giants Mondi,
DS Smith and Smurfit Kappa slumped for a second day after Chinese rival Nine Dragons outlined plans to enter the US market. The firm revealed that it will invest $300m (£227m) in two mills in the States.
Mondi slipped back for a seventh straight day, plunging 170p to £17.76, while DS Smith and Smurfit tumbled 29p to 418.2p and 156p to £25.80, respectively.
Sage clawed back 9.6p to 556.2p after analysts at Deutsche Bank warned that the software giant’s woes could have piqued the interest of private equity firms or an activist investor.
Finally, on the Aim market, Russiabased oil minnow Urals Energy plummeted 23.5p to 51.5p after becoming aware of an “unauthorised loan” of around $1.5m that has “significantly constrained” its day-today funding needs.