Technology stocks fell heavily across Europe and Asia yesterday and were set to fall again on Wall Street after the worst day for Apple shares in more than a year, while easing political tensions lifted the euro.
The tech-heavy Nasdaq was seen opening down 0.8 per cent after an almost two per cent drop on Friday, its third biggest one-day loss of the year.
“This is the nature of the tech sector these days. Valuations do from time to time become very stretched and they come back and anyone who has paid a very high valuation might experience some short-term pain,” said Fergus Shaw, fund manager at Cerno Capital.
A near four per cent slump in Apple on Friday, along with falls in Alphabet, Facebook and others took a heavy toll on rivals including Samsung and Europe’s big chipmakers STMicro and Dialog yesterday.
While year-to-date Nasdaq gains of more than 15 per cent have outperformed the wider market, an ebbing of the Trump reflation trade and a slide in US economic surprises deep into negative territory have prompted some investors to review the mix of their portfolios.
Europe’s tech index fell 3.5 per cent to put it on track for its biggest one-day loss since Britain’s Brexit vote a year ago. The index had reached a 15-year high earlier this month having soared around 40 per cent over the last year.
The pan-European STOXX 600 was down 0.8 per cent, supported by modest gains in oil prices, which lifted shares in energy stocks, and by first round French parliamentary election results which look set to give President Emmanuel Macron a huge majority to push through pro-business reforms.
The euro rose back to $1.1220 in the currency markets, where anticipation is building ahead of tomorrow’s conclusion of a two-day United States Federal Reserve meeting at which the central bank is expected to nudge up US interest rates.
But economists will be watching to see whether the recent dip in economic data and uncertainty surrounding United States President Donald Trump has dented confidence.
In commodities, crude oil prices extended gains after rising on Friday when a pipeline leak in major producer Nigeria overpowered supply worries weighing on the market.
US crude and Brent were both more than one per cent higher at $46.41 and $48.80 a barrel respectively, copper was steady while gold snapped a three-day losing streak to climb to $1,269 an ounce.