The Tuesday Market Minute
- Global stocks slide, with tech shares leading the declines, as investors retreat from risk markets amid questions over the fate of U.S. China trade talks and persistent signals of slowing economic growth.
- Apple shares continue to slump, with German-listed units falling to the lowest level since July, amid multiple reports of tepid iPhone demand, dragging supply-chain stocks and broader tech shares lower in markets around the world.
- Falling homebuilder confidence, alongside mix signals on rate hikes from senior Fed members, has the dollar and Treasury yields in retreat ahead of key housing start and building permit data for October at 8:30 eastern time.
- Oil prices slide as U.S. production rates, slowing global demand, offset talk of Saudi-lead output cuts from OPEC next month in Vienna.
- U.S. equity futures retreat in-line with global stocks, with the Dow called 100 points lower and the Nasdaq set for a 30-point opening bell decline.
Global stocks extended declines Wednesday, with tech and auto sector shares leading to the downside, as investors exited risk markets all over the world amid persistent signals of slowing economic growth and questions of the fate of U.S. China trade talks.
The weekend failure of the APEC summit in Port Moresby to agree to a text on trade, the first since 1993, alongside subsequent comments from officials in Beijing that accused the U.S. of "not accepting reasonable revisions" from China, suggest this month's make-or-break meeting between President Donald Trump and China's Xi Jinping may not ease the existing tensions between the world's two biggest economies. Further concerns over the strength of global consumer demand, as evidenced in both the extended declines in tech stocks and weakening U.S. housing data, have kept investors from pushing markets higher until -- and if -- clarity emerges from the summit in Buenos Aires later this month.
"It seems investors have two key concerns. One is the anxiety over the trade tensions narrative, and two, what will the Fed do next?," said FXTM's chief market strategist Hussein Sayed. "U.S. President Trump needs to resolve the trade dispute between the U.S. and China as soon as possible so he can Tweet again about rising U.S. stock markets. Many hope to see a breakthrough at the G20 summit when Presidents Trump and Xi meet at the end of this month. Unfortunately, there're no encouraging signs yet after a delegation from Beijing canceled plans to visit the U.S. to negotiate a trade deal."
Tech stocks, which led losses on Wall Street last night amid a slump into bear market territory for Apple Inc. (AAPL) , paced declines in Asia trading, as well, with names such as Samsung Electronics (SSNLF) and SK Hynix (HXSCL) pressuring South Korea's KOSPI and Sony Corp. (SNE) and Tokyo Electron (TOELY) holding down markets in Japan. Automakers on the Nikkei 225 were also dragged lower by the fallout from the arrest of Nissan Motor Co. (NSANY) chairman Caros Ghosn on financial misconduct charges yesterday, with shares in the country's second-largest carmaker falling 5.5%, offsetting a 1.6% gain for Toyota Motor Co. (TM) .
The MSCI ex-Japan index, the broadest measure of regional share prices, was marked 1.2% lower heading into the close of trading Tuesday while Japan's Nikkei 225 slid 1.09% to end the session at 21,583.12 points.
The total world exchange market cap is down almost USD 13 trillion(!), or almost 15% since January. pic.twitter.com/aCmTE1fdVl- jeroen blokland (@jsblokland) November 20, 2018
Early indications from U.S. equity futures suggest the weakness is likely to extend into today's trading session, although volumes are likely to be thinner than normal owing to Thursday's Thanksgiving holiday and the Black Friday shopping that usually follows. Contracts tied to the Dow Jones Industrial Average
The Nasdaq Composite
Apple shares were marked 2.8% lower in pre-market trading Tuesday, indicating an opening bell price of $180.66 each, a move that would take the decline since its October 3 close past 20% Nvidia (NVDA) shares, which have fallen more than 27% over the past week alone, are indicated to slide another 5.22% to $137.13 each.
Facebook, which has fallen nearly 40% since late July amid a host of data privacy, corporate governance and profitability concerns, was marked 2% lower in pre-market trading, indicating an opening bell price of $128.85 each. Alphabet slipped another 1.55% to $1,012.00 in pre-market trading, a move would take the Google parent more than 20% lower from its July 25 peak, while Amazon was marked 3.1% lower at $1,465.00 each, extending its 3-month tumble past 27.5%.
Facebook, Apple, Amazon, Alphabet and Netflix, the five core FANG names, have lost $945 billion in market value since each hit a 52-week high between July and October, with Amazon's $255 billion decline topping the list of lost value.
European stocks were also weaker at the opening bell, with the Stoxx 600 benchmark falling 0.4% by mid-day of trading in Frankfurt, lead to the downside by tech, basic materials and financial stocks, while Britain's FTSE 100 edged 0.1% higher as the pound slipped to 1.2848 against the U.S. dollar.
Renault SA (RNLSY) shares extended declines in Paris, falling a further 2.2% €57.70, the lowest in four years, amid reports the group will hold an extraordinary board meeting to discuss an interim leadership structure while Ghosn is detained in Japan. France's Economy Minister, Bruno Le Marie, also added to calls for interim leadership changes, but stopped short of calling for Ghosn's formal departure until all the facts are known.
Away from equities, the U.S. dollar index, which tracks the greenback against a basket of six global currencies, fell to the lowest level in a week, while benchmark 10-year Treasury note yields slipped to 3.06% as investors backed away from rate hike bets following the biggest slump in homebuilder confidence in more than four years yesterday, according to the NAHB's closely-watched index, and broader concerns over consumer demand heading into the holiday season.
Global oil prices were also under pressure, despite the weaker U.S. dollar, as slowing growth signals and robust production rates continue to offset reports that Saudi Arabia will push OPEC members to trim output targets at their meeting next month in Vienna.
Brent crude contracts for January delivery, the global benchmark, were seen 34 cents loweer from their Monday close in New York and changing hands at $66.45 per barrel while WTI contracts for December, which are more tightly liked to U.S gas prices, were marked 8 cents lower at $57.12 per barrel and more than 25% from the October 4 peak of $76.41.