US tech selloff worsens, Nasdaq opens down 1.4%

Traders work on the floor of the New York Stock Exchange at the closing bell of the Dow Jones Industrial Average on June 8, 2017 in New York.
Traders work on the floor of the New York Stock Exchange at the closing bell of the Dow Jones Industrial Average on June 8, 2017 in New York. PHOTO: AFP

NEW YORK (BLOOMBERG) - The rout in US.technology shares worsened after spreading to Asia and Europe on concern the group had risen too far too quickly. The pound retreated as an embattled Theresa May fought to survive the fallout from the British general election.

The tech-heavy Nasdaq 100 fell 1.4 per cent, adding to its 2.4 per cent rout on Friday. Microsof, Amazon.com, Facebook and Alphabet all lost more than 1.5 per cent.

Losses in the S&P 500 Index were muted, with the benchmark gauge down 0.3 per cent. Energy and phone shares advanced more than 1 per cent.

The Stoxx Europe 600 Index slid 0.9 per cent, with ASML Holding dropping 3.8 per cent. France's CAC 40 lost 0.9 per cent even as Emmanuel Macron headed for a clear majority in the National Assembly. His success appears to be largely priced in.

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Tech shares were the biggest losers on the MSCI Asia Pacific Index, which dropped 0.3 per cent. South Korea's Kospi lost 1 per cent, with Samsung Electronics slumping 1.6 per cent. Hong Kong's Hang Seng Index declined 1.2 per cent, as Tencent Holdings Ltd. fell 2.5 per cent.

Markets in Australia, Malaysia and the Philippines were closed for holidays.

The Nasdaq 100 Index's two-day loss topped 3.5 per cent, an abrupt turnaround after closing at a record on Thursday with a 21 per cent gain for the year. Apple and Netflix lost at least 3.5 per cent, while Samsung Electronics, ASML Holding and Tencent Holdings led declines in Europe and Asia. 

Energy shares rallied, mitigating losses in the S&P 500 Index, as crude topped US$46 a barrel. Treasuries and the US dollar were little changed.

The sudden slide in tech stocks, which had helped send global equities to repeated record levels this year, blindsided many investors after markets largely brushed aside last week's trio of risk events. The question now is whether the drops represent merely a pause or a more fundamental crack in the US stock bull market.

"There's a chance US internet technology stocks that have propelled a global stock rally will now serve as a buzz kill," said Mitsuo Shimizu, deputy general manager at Japan Asia Securities in Tokyo.

Meanwhile, in Washington the drama continues. Attorney General Jeff Sessions offered to speak to the Senate Intelligence Committee to answer questions about alleged Russian meddling in the 2016 presidential election. And the Federal Reserve is this week set to lift rates, leading a pack of central banks that are mostly nodding in the direction of removing ultra-accommodative policy.

Fed policy makers are forecast to raise their benchmark interest rate for the second time this year on Wednesday. Central banks in Japan, Switzerland and Britain are also scheduled to weigh in with policy decisions this week.

The pound fell 0.7 per cent to US$1.2662. The currency lost 1.6 per cent on Friday.  The euro strengthened 0.2 per cent to US$1.1219.

The Bloomberg Dollar Spot Index fell less than 0.1 per cent after gaining 0.5 per cent over the previous three sessions.

West Texas crude added 1.7 per cent to US$46.59 a barrel after Saudi Arabia and Russia sought to reassure investors that coordinated production cuts by Opec and its partners are draining a global glut.

Gold was little changed at US$1,267.21 an ounce, after three days of declines.