Equities sink in global selloff; oil in retreat
World markets sank Friday as US tech stocks continued to get hammered, while oil prices and bitcoin also dipped before the weekend as investors sought safety, dealers said.
US tech shares continued their downward march at the opening bell, with the Nasdaq Composite dropping 0.7 percent, after having fallen by 1.1 percent on Thursday.
Friday’s drop was in no small part due to Netflix. Its shares tumbled 21.5 percent after the US entertainment streaming giant reported cooling 2021 subscriber growth in after-hours results, having boomed during Covid lockdowns on surging demand from home-bound consumers.
“Risk-off sentiment and a sell-off on Wall Street are sending shockwaves across global markets,” said Interactive Investor Victoria Scholar.
Sentiment was also hit Thursday on a report that the US fitness firm Peloton planned to suspend production of bikes and treadmills on falling consumer demand.
US tech firms also remain under pressure because they are considered more susceptible to higher borrowing costs than many other companies.
“Tech carnage continues (and) stock markets continue downwards spiral,” noted Markets.com analyst Neil Wilson.
European stocks were hard hit in afternoon trading, with London equities down 1.4 percent, Paris falling 2.2 percent and Frankfurt slumping 2.4 percent.
Asia markets ended the day mostly down.
Wilson warned that “wild swings are catching many offside”, noting there was a “broad mood against pandemic bubble winners” like Netflix and Peloton.
– Uncertainty and ‘geopolitical noise’ –
Angst about the Fed’s determination to fight surging inflation by removing its ultra-loose monetary policy is dealing a severe blow to the rally in global markets that has run virtually uninterrupted for nearly two years, leaving most markets in the red at the start of 2022.
Officials have started tapering the massive bond-buying put in place at the start of the coronavirus pandemic and it is widely expected they will start lifting borrowing costs from March, though by how much is a matter of speculation.
The Fed has also said it will begin offloading the bonds it already has on its books, which have been key in helping keep rates low, though it is not clear how quickly it will do that.
Markets are now awaiting the Fed board’s meeting next week, hoping it will provide a clear idea about its timetable for policy normalisation.
Traders are also keeping a nervous eye on Ukraine, where Russia’s troop build-up is fanning fears Moscow is planning an invasion.
Analyst Patrick O’Hare noted the absence of buy-the-dip investors which had helped propel the market higher last year.
“Their reserve right now, however, is likely tethered to the uncertainty involving the Fed’s actions to rein in inflation, ample geopolitical noise surrounding the Russia-Ukraine situation, and the price action thus far, which has yet to inspire confidence that there won’t be lower lows,” he said.
In other markets, oil prices retreated from recent seven-year highs on news of rising US crude inventories, which indicates weaker demand in the world’s top consumer.
Bitcoin fell below $39,000, sitting far below last November’s record of almost $69,000.
– Key figures around 1200 GMT –
London – FTSE 100: DOWN 1.1 percent at 7,502.37 points
Frankfurt – DAX: DOWN 1.8 percent at 15,628.06
Paris – CAC 40: DOWN 1.6 percent at 7,080.82
EURO STOXX 50: DOWN 1.5 percent at 4,234.91
Tokyo – Nikkei 225: DOWN 0.9 percent at 27,522.26 (close)
Hong Kong – Hang Seng Index: UP 0.1 percent at 24,965.55 (close)
Shanghai – Composite: DOWN 0.9 percent at 3,522.57 (close)
New York – Dow: DOWN 0.9 percent at 34,715.39 (close)
Euro/dollar: UP at $1.1358 from $1.1312 late Thursday
Pound/dollar: DOWN at $1.3564 from $1.3600
Euro/pound: UP at 83.72 pence from 83.17 pence
Dollar/yen: DOWN at 113.58 yen from 114.11 yen
Brent North Sea crude: DOWN 0.9 percent at $87.60 per barrel
West Texas Intermediate: DOWN 0.7 percent at $84.96 per barrel