World shares mixed after sell-off on Wall Street

AP – European shares opened higher yesterday and the United States (US)futures bounced back after a day of losses in Asia.

Germany’s DAX gained 0.4 per cent to 13,101.39 and the CAC 40 in Paris jumped 0.8 per cent to 5,048.18. Britain’s FTSE 100 climbed 0.4 per cent to 5,874.37. US shares looked set for a comeback, with the future for the S&P 500 up 0.3 per cent and that for the Dow industrials 0.5 per cent higher.

There was little going on in Asia to alter the markets’ downward trajectory after the US benchmark S&P 500 gave up 3.5 per cent on Thursday, its biggest loss in three months, and the Nasdaq fell five per cent as high-flying technology companies took a tumble after months of spectacular gains.

There seemed to be no obvious trigger for the sell-off, with economic data coming in roughly where the market had expected and no companies issuing foreboding warnings. But the market felt due for a breather, analysts said.

“Altitude sickness?” asked Riki Ogawa of Mizuho Bank. “To be sure, the plunge after overly exuberant rallies of recent was in itself not counter-intuitive; but the precise motivation of, and triggers for, market moves remains an enigma.”

There is still plenty of money sloshing through financial systems with the Federal Reserve and many other central banks unleashing massive amounts of cash through bond purchases, while keeping interest rates ultra low.

A man stands in front of an electronic stock board showing Japan’s Nikkei 225 index at a securities firm in Tokyo. PHOTO: AP

“While I don’t think its a healthy meltdown, getting rid of some of the short term speculator froth will offer up better levels for the Wall of Money to indulge as we know the Fed is not going anywhere soon,” Stephen Innes of AxiCorp said in a commentary.

The Nikkei 225 shed 1.1 per cent to 23,205.43 while the Hang Seng in Hong Kong lost 1.3 per cent to 24,095.45. Australia’s S&P/ASX 200 gave up 3.1 per cent to 5,925.50 and the Shanghai Composite index slipped 0.9 per cent to 3,355.37. South Korea’s Kospi lost 1.2 per cent to 2,368.25.

Wall Street’s unloading of technology shares on Thursday ended with Apple plunging eight per cent. Amazon lost 4.6 per cent and Facebook gave back 3.8 per cent.

Investors have been betting those companies will keep making huge profits as people spend even more time online with their devices during the pandemic, making new market darlings of companies like Zoom Video Communications as many Americans work remotely and students do online learning.

Even with Thursday’s losses, Apple is still up 64.7 per cent for the year, and Amazon is up 82.3 per cent. Zoom’s gain for the year is still a whopping 460.4 per cent.

The gains have been based on rosy assumptions about the virus’s impact on the economy, as well as on prospects for Congress and the White House coming up with another economic relief package.

Economists surveyed by FactSet have forecast that the US economy created 1.4 million jobs in August, down from 1.74 million jobs in July.

In energy trading, US benchmark crude also rebounded, gaining 31 cents to USD41.68 per barrel in electronic trading on the New York Mercantile Exchange. It lost 14 cents to USD41.37 on Thursday. Brent crude, the international standard, added 33 cents to USD44.40 per barrel.