DStv Channel 403 Saturday, 02 November 2024

Markets track tech-led plunge on Wall St, yen extends gains

TOKYO - Heavy selloffs in tech stocks hammered equity markets on Thursday, tracking a plunge on Wall Street as disappointing earnings caused traders to panic that a long-running rally in the sector may have been overdone.

Tokyo's Nikkei led the retreat in equities, diving more than three percent, with a stronger yen adding to the downward pressure on exporters.

Global stocks have pushed ever higher this year -- with New York's three main indexes hitting multiple records -- with tech titans such as Alphabet and chip makers such as Nvidia and TSMC boosted by an explosion of interest in all things linked to artificial intelligence.

The rallies have been helped by blockbuster profits and upbeat outlooks, causing investors to pile more cash in owing to a fear of missing out.

However, with valuations pushing to dizzying heights, analysts have been warning about retreat, and Tuesday's earnings from Tesla and Google-parent Alphabet provided a selling opportunity.

Tesla said profits fell 45 percent in the second quarter owing to price cuts and aggressive AI investment and, while Alphabet exceeded forecasts, results from YouTube were less upbeat.

The two firms are part of the "Magnificent Seven" tech kings who have been key to the driving gains in markets this year. Tesla shed 12.3 percent and Alphabet gave up five percent.

All three main indexes on Wall Street tumbled, with the Nasdaq shedding more than three percent and the S&P 500 down more than two percent in its worst day since December 2022.

"Investors are now facing the pressing question: How long will it take for these massive investments by hyperscalers to start delivering over-the-top results?" said analyst Stephen Innes.

"Patience is becoming the new flag-bearer for recent tech stockholders as they wait for these tech bets to pay off," he said in his Dark Side Of The Boom newsletter.

Asia followed suit, with tech firms among the big losers -- Seoul's SK Hynix dived nearly nine percent despite strong earnings, while Samsung lost two percent.

Tokyo-listed Sony was off more than five percent and SoftBank 9.4 percent, and in Hong Kong Tencent gave up three percent with Meituan 5.7 percent lower.

Hong Kong and Shanghai fell despite a surprise cut in a key rate by the Chinese central bank.

Sydney, Seoul, Singapore, Wellington, Mumbai, Bangkok, Manila and Jakarta were also well in the red. Taipei was closed for a second day owing to a typhoon.

London, Paris and Frankfurt were sharply lower in the morning.

The Nikkei in Tokyo tumbled 3.3 percent, with carmaker Nissan shedding seven percent after issuing a profit warning.

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