ASX to drop, as Wall Street’s volatile tech sell-off resumes

Australian shares are expected to fall sharply after Wall Street’s technology stocks were heavily sold off again.

ASX futures were down 74 points (or 1.3 per cent) by 6:10am AEST.

US stocks closed lower after a choppy trading session overnight as heavyweight tech-related stocks resumed their decline following a sharp rebound the previous session.

Tech-related stocks, which have performed the best since the March coronavirus sell-off, fell overnight. They include Apple (-3.3pc), Microsoft (-2.8pc) and Amazon (-2.9pc).

Tesla had surged by more than 8 per cent at its peak, but closed just 1.4 per cent higher.

The Dow Jones index dropped 406 points (or 1.5 per cent) to 27,535, while the benchmark S&P 500 closed 1.8 per cent lower at 3,339 points.

The tech-heavy Nasdaq index was hardest hit, down 2 per cent to 10,920 points, after a volatile week.

Market volatility spikes

Last week, the Nasdaq hit a record high, before plunging 10 per cent, over three days, into correction territory.

It managed to claw back some losses yesterday, as investors bought the dip and caused the market to rebound from its biggest three-day plunge since March.

However, most of that recovery was wiped out overnight.

Many market participants view the sell-off as a bout of turbulence rather than the start of a deeper slide.

Despite the recent pullback, the S&P tech index is up about 24 per cent this year, far outperforming the S&P 500’s rise of 3.5 per cent in the same period.

The latest economic figures from the US Labor Department did not help sentiment — 884,000 Americans filed for unemployment benefits last week as layoffs persisted across industries.

It was a worse-than-expected result as weekly jobless claims remained extraordinarily high in the United States.

Also, the US Senate killed a Republican bill that would have provided about $US300 billion ($413 billion) in new coronavirus aid, as Democrats seeking far more funding prevented it from advancing.

Senate Majority Leader Mitch McConnell said in an interview with Fox News the electoral outcome for control of the Senate could go either way.

Australian dollar slips after ECB decision

The Australian dollar slipped (-0.4pc) to 72.55 US cents.

It also fell (-0.5pc) to 61.4 euro cents after the European Central Bank’s (ECB) decision not to ramp up its stimulus program, and leave interest rates on hold.

Economists said the ECB would likely have to take more action to support its economy, possibly in December.

“By resisting calls to cut interest rates deeper into negative territory, the bank has consolidated the appeal of the euro to global investors,” said Ulas Akincilar, head of trading at the online broker Infinox.

However, the local currency jumped (+1.3pc) to 56.7 British pence on growing concerns of a messy no-deal Brexit.