SINGAPORE - Asian markets opened in a sea of red on Thursday (Oct 25), with the Straits Times Index (STI) tumbling at the open to 2,992.00 as panic sellers ran for the exits following an ugly US session overnight that saw the Dow and S&P 500 indices erase their 2018 gains and the Nasdaq enter correction territory.
The STI was down 1.38 per cent or 41.74 points at 2,990.34 just after 10am, below the 3,000 key psychological support level.
Losers outnumbered gainers 244 to 58 at around 10am in the broader Singapore market, with oil and gas stocks, banks, manufacturing tech and property counters and other high-beta stocks all taking a beating, though some consumer stocks showed resilience.
Genting Singapore and Yangzijiang Shipbuilding were the top two active traded stocks, with Genting down 3.30 per cent to $0.88, and YZJ Shipbuilding down 4.17 per cent to S$1.15 as at 10am.
Eleven of the 30 STI stocks have fallen to 52-week lows. These are Keppel Corp, City Developments, Genting Singapore, Golden Agri-Resources, Hongkong Land, Jardine C&C, Jardine Matheson, Jardine Strategic, OCBC Bank, UOL and Venture.
Stock watchers are bracing for the October rout to deepen. IG market strategist Jingyi Pan called it "fear toppling over itself".
She said: "A collection of pockets of concerns seems to have amounted to the selling pressure that struck the equity space overnight. While specific items including Texas Instrument's revenue miss and weaker-than-expected sales target underpinned the fall, the reaction does look over extended as key support levels were brought down on major indices."
Early movers in the region including the ASX 200 and the Nikkei 225 have shown extensive drops of about 2 per cent and 3 per cent this morning, measuring close to the fall on Oct 11, she noted.
CMC analyst Margaret Yang said a mixed earnings report from the ongoing earnings season in the US has failed to meet growth expectations, which has put Asian investors on alert.
She said: "Even after the 12 per cent drop in Nasdaq Index in October, its average trailing price-to-earnings remains relatively high - at around 42 times. There is growing tendency to bring down technology companies' valuation back to reality."
A market correction refers to a price decline of at least 10 per cent, so last night's drop puts the Nasdaq firmly in correction territory after hitting record highs at the end of August.
Meanwhile, US treasuries have rallied while the greenback has strengthened to its highest level seen in two months, so the hunt for safety is on, Ms Yang said.
Maybank Kim Eng told clients to brace for continued market turmoil, on disappointing forecasts from chipmakers and mounting concerns that corporate profits and economic growth are peaking amid tighter monetary conditions. "Technically, significant support for the STI is found at 2,960, while overhead resistance is capped at the 3,090 to 3,130 breakdown gap."