Tech sell-off causes sharp global fall

VAT Group drives tech down on weaker semi­con­duc­tor de­mand Dalata and Ryanair help drag down Iseq over bud­get rise in hos­pi­tal­ity VAT

The Irish Times - Business - - BUSINESS MARKETS - EOIN BURKE-KENNEDY

Stocks on ma­jor world mar­kets slid to a three-month low yes­ter­day, with the bench­mark US S&P500 stock in­dex fall­ing more than 3 per cent, its big­gest one-day fall since Fe­bru­ary.

Euro­pean shares had their worst day since June as con­cerns around ris­ing debt yields gripped eq­uity mar­kets world­wide, while tech stocks sank on signs of slow­ing de­mand in the semi­con­duc­tor in­dus­try.

The pan-Euro­pean Stoxx 600 in­dex tum­bled 1.6 per cent to its low­est since April 4th, while Ger­many’s Dax dropped 2.2 per cent.

DUBLIN

The Iseq ex­pe­ri­enced one of its big­gest one-day falls of the year, drop­ping 174 points to 2.7 per cent to 6,153.

Ho­tel group Dalata was down more than 4 per cent at €6.02 a day af­ter Min­is­ter for Fi­nance Paschal Dono­hoe re­moved the hos­pi­tal­ity sec­tor’s pref­er­en­tial rate of VAT. “Tourism was a shin­ing light for Ire­land in the dark­ness of re­ces­sion, and now the in­dus­try feels aban­doned,” Dalata chief ex­ec­u­tive Pat McCann said.

Iseq heavy­weight Ryanair fell nearly 3 per cent to €11.41. There is spec­u­la­tion the air­line will an­nounce a raft of new routes this week.

Smur­fit Kappa suf­fered an even big­ger one-day drop, shed­ding al­most 6 per cent to close at €29.53. Bank of Ire­land and AIB also dropped, by 1.5 and 1 per cent re­spec­tively.

LON­DON

Bri­tain’s top share in­dex hov­ered near a six-month low as ris­ing hopes for a Brexit deal lifted the pound, hurt­ing the shares of big multi­na­tional com­pa­nies.

The Ftse 100 re­treated by 1.3 per cent, while the pan-Euro­pean Stoxx 600 fell 1.6 per cent as tech stocks suf­fered their worst day since the 2016 Brexit vote and in­vestors be­came anx­ious about ris­ing yields af­fect­ing eq­ui­ties.

Among the big­gest drags on the Ftse 100 were big multi­na­tion­als Di­a­geo and Reckitt Benckiser, down 2.4 and 1 per cent re­spec­tively. Burberry was the worst-per­form­ing stock, down 6.2 per cent, as in­vestors sold shares in the richly val­ued lux­ury sec­tor fol­low­ing a Morgan Stan­ley down­grade and amid wor­ries over the key Chi­nese mar­ket.

Min­ers were also a big drag on the in­dex, with BHP Bil­li­ton , Glen­core and Rio Tinto all fall­ing 2-2.3 per cent as met­als prices eased.

Tele­coms firm BT was the big­gest gainer on the Ftse 100, up 4.2 per cent, as the broader sec­tor in Europe, seen as a “de­fen­sive” play favoured dur­ing riskier times, was also in de­mand.

EUROPE

Aus­trian chip­maker AMS fell 5.9 per cent and peer ST Mi­cro­elec­tron­ics lost 5.8 per cent af­ter VAT Group said it was cut­ting work­ing hours at one of its fac­to­ries due to a fall in de­mand from the chip equip­ment mak­ers it sup­plies.

Shares in VAT Group sank 10.3 per cent. “On the one hand, the short time work­ing re­flects the well-known soft­en­ing of the in­vest­ment cy­cle in the semi­con­duc­tor in­dus­try since Q2 2018 . . . and on the other hand it also re­flects the fact the in­dus­try weak­ness looks to be ex­tend­ing into Q1 2019,” wrote Baader Helvea an­a­lysts.

The big­gest Euro­pean faller was Wire­card, which sank 14.2 per cent, the day af­ter the Ger­man pay­ments firm got a big boost when it un­veiled new tar­gets, say­ing it would de­liver six times cur­rent Ebitda by 2025.

NEW YORK

The Dow Jones fell 831.83 points, or 2.2 per cent as wor­ries over China and the im­pact of ris­ing Trea­sury yields on global growth drove falls in lux­ury goods com­pa­nies and chip­mak­ers.

Tech­nol­ogy stocks slid more than 3 per cent, the most among the 11 ma­jor S&P sec­tors, with the Philadel­phia Semi­con­duc­tor in­dex down 4.6 per cent af­ter Swiss vacuum valve maker VAT Group said de­mand from chip equip­ment mak­ers was soft­en­ing. Intel fell 3.8 per cent and Nvidia 7.5 per cent. Chip gear pro­duc­ers Ap­plied Ma­te­ri­als, Ter­a­dyne and ASML Hold­ings fell 3.6-5.5 per cent. – Ad­di­tional re­port­ing by Reuters

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