Overseas Market Report

US stocks have tumbled, with the S&P 500 and the Dow marking their biggest daily declines since February 8 and technology stocks were at the centre of the carnage as rising US Treasury yields sent investors fleeing from risky assets. US long-dated Treasury yields rose again in extension of a trend during the past few weeks fuelled by solid US economic data that reinforced expectations of multiple interest rate hikes in the next 12 months.

Investors also worried about the impact of trade tensions on corporate profits and Hurricane Michael’s landfall in Florida adding to the uncertainty. The Nasdaq on Wednesday registered its biggest daily drop since June 24, 2016, hurt by technology stocks which had their biggest one-day drop since August 2011. The S&P 500 ended the day down 3.3 per cent, representing a 4.95 per cent drop from its September 20 record closing high.

“It’s a bit of a bloodbath today, clear risk-off action with few places to hide. Gold is up a little bit. The Vix is up more substantially,” said Ed Campbell, senior portfolio manager at QMA, the asset management branch of Prudential Financial. “It’s primarily the cumulative effect of interest rate moves over the past five days and news reports about trade impacting companies. “We saw stocks hanging in there pretty good as interest rates were moving and now they’re starting to crack. Markets are starting to contemplate that this could be a Fed that’s overzealous in terms of interest rate hikes.”

The Dow Jones Industrial Average fell 831.83 points, or 3.15 per cent, to 25,598.74, the S&P 500 lost 94.66 points, or 3.29 per cent, to 2,785.68 and the Nasdaq Composite dropped 315.97 points, or 4.08 per cent, to 7,422.05.

Morning Market Note - Thursday 11th October