Big-Tech Slump Drags U.S. Stocks to Two-Week Low

07/09/2020

Global stocks mostly stabilized on Monday after a big-tech selloff last Thursday/Friday that dragged Wall Street to two-week lows. The dollar edged higher and crude oil extended its recent slide. On Friday the JSE/All-Share fell 1.18% to 53,878.95 points and the Top-40 1.19%, weighed down by rand hedges and Naspers – with the latter losing 3.82% to close at R2,933.42. Industrials were off 2.09%, while banks made gains of 1.35%. The rand up 0.5% to 16.6015/dollar, while the yield on 10 year govt rand bonds rose 10.0 bps to 9.214%. We looking forward to a positive start at the opening, IG markets up 180points.

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EU/UK

European stock markets closed lower on Friday as investors digested the U.S non-farm payrolls figures and weakness in the UK housebuilding sector. The payroll figures showed that 1.37 million jobs were added last month, economists were expecting 1.4 million – somewhat in-line. By the end of the session: Euro Stoxx 600 was 1.13% lower, alongside a 0.88% drop for the FTSE100, while Germany’s Dax had declined 1.65% to 12,842.66. 

Here are some key events coming up:

  • The next Brexit negotiating round begins with face-to-face discussions between the U.K. and the EU in London.
  • The ECB will probably hold rates on Thursday but indicate that downside risks have intensified, suggesting further easing is possible before year-end.

U.S

The Dow opened 185.25 points lower on Friday, carrying on losses recorded in the previous session on the back of a heavy tech sell-off. According to the Department of Labour, hiring in the States slowed from a 1.73m pace in July to 1.37m in August. On the other hand, the US unemployment rate fell far more sharply than anticipated – down to 8.4% from 10.2% in July and undershooting consensus estimates for a reading of 9.9%. By the end of day’s trading: the Dow closed 159points, or 0.56% down, alongside the S&P500 giving up 0.81%, while the tech-heavy Nasdaq retreated 1.27%. Equity trading this week will be shortened in the U.S. this week as investors take Monday off to observe the Labor Day holiday.

ASIA

Asian markets mixed om Monday as China export data offsets impact of Wall Street’s retreat. Equities in Hong Kong and China improved after the release of data that showed China’s August exports were stronger than expected from the prior year. Japan’s Nikkei dipped 0.43% while Hong Kong’s Hang Seng index gained 0.11%. The Shanghai Composite declined 0.62%, while Australia’s ASX 200 marginally gained 0.17%.

COMMODITIES

Oil prices dropped more than $1 a barrel on Monday after Saudi Arabia made the deepest monthly price cuts for supply to Asia in five months. Brent crude was at $41.75 a barrel, off 1.51%, while the U.S. WTI crude skidded 1.38%, to $39.22 a barrel.