Dow drops 600 points, Tech losses mount, Tesla plunges 21%

09/09/2020

Asian stocks are lower across all regions this morning following a plunge in US markets, with European equity futures fluctuating amid worries that a Covid-19 vaccine could be delayed and concerns about equity valuations. The dollar and Treasuries extended gains. AstraZeneca Plc’s decision to pause a vaccine trial weighed on sentiment. S&P 500 futures and Nasdaq 100 contracts turned higher after earlier declines. Tencent trades 0.79% lower in HK, with the JSE Top 40 futures indicating a slightly lower start, down 163 points, or 0.30%.

Locally the FTSE/JSE Africa All-Share Index closed up 0.07% to 54,438, supported by gains in the banking and retail sectors , up 3.8% and 3.3% respectively, despite a weaker rand that lost 1.4% to 16.97 vs the USD after the country’s economy recorded its worst slump in decades in the second quarter. Heavyweight Naspers however weighed on the back of a continued sell-off in Tech stocks around the globe. Miners were also on the backfoot, with platinum counters getting hit the most, down 3.01%. The Yield on 10 year govt rand bonds rose 5.9 bps to 9.255%.


South Africa’s ruling African National Congress will meet with officials from the Zimbabwe African National Union-Patriotic Front party to help mediate an end to the nation’s escalating economic and political crisis.

  • (NY1 SJ): South Africa GDP Drop Makes Recession The Longest Since 1992
  • South Africa Lockdown Means Longest Recession in 28 Years
  • Lawmakers in Parliament’s select committee on finance discuss tax relief bill
  • (TCP SJ): Transaction Capital to Buy 49.9% of WeBuyCars for 1.84b Rand

    EARNINGS:
    * Growthpoint Properties (GRT SJ)
    * Momentum Metropolitan (MTM SJ)

    ECONOMIC DATA
    * 12pm: 3Q BER Business Confidence, est. 8, prior 5

EU/UK

The pan-European Stoxx 600 closed over 1% lower, with the tech sector falling another 2% as almost all sectors and major bourses fell into negative territory. London’s FTSE100 ended the session down 0.12%, with Paris’ CAC-40 erasing 1.59% at the close, while the German DAX saw the session out 1.01% lower. Revised data published yesterday showed that second-quarter euro zone GDP contracted by 14.7% year-on-year and 11% from the previous quarter, less than initial estimates but still its sharpest decline on record. The U.K. is planning to ramp up its preparations to leave the European Union without a deal if no free trade accord can be reached this week.

US

Stocks fell sharply last night as another massive drop in tech put the Nasdaq Composite in correction territory and led to the S&P 500′s worst three-day stretch in months. The Nasdaq dropped 4.1% to end the day at 10,847. Tuesday’s drop put the tech-heavy Nasdaq down 10% over the past three days. The Dow plunged 632 points, or 2.3%, to 27,500, with the S&P 500 that slid 2.8% to 3,331.84. The broader-market index was down nearly 7% over the past three days, its worst three-day stretch since June. Tesla plunged 21.1% — its biggest one-day drop on record — after the S&P Dow Jones Indices failed to add the stock to the S&P 500 after the bell Friday. Investors were betting on inclusion of the stock into the S&P 500, hoping for the stamp of approval on the rally by S&P. Apple dropped 6.7% to lead tech lower Facebook and Amazon were both down more than 4%. Microsoft fell 6.7%. Netflix closed 1.8% lower and Alphabet lost 3.6%. Zoom Video fell by 5.1%.

ASIA

Asian shares are all lower across the region as AstraZeneca Plc’s decision to pause a vaccine trial weighed on sentiment, with the Nikkei in Japan down 1.04%, in HK the Hand Seng trades 1.03% lower (Tencent -0.79%) and the Chinese Shanghai shedding 1.4%, In OZ the ASX 200 lost 2.15% with miners playing catch-up from yesterday’s falls; down 1.47%.

COMMODITIES West Texas Intermediate crude retreated 0.6% to $36.54 a barrel, with Gold down 0.3% to $1,926.14 an ounce.