Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for September 4, 2020.
Stock market indices around the world plunged yesterday as investors heavily sold down tech stocks, with Tesla, Apple, Microsoft and more on the receiving end. Investors large and small moved to take profits after weeks of consistent share price gains. On Wednesday it was reported that Scottish investment firm Baillie Gifford, Tesla’s largest external shareholder, had slashed the size of its holding in the company almost in half. Tesla stock fell 9% on Thursday, while Nvidia was down 9.3%, Apple 8% and Microsoft 6.2%.
Asian stocks followed suit overnight but losses were less severe, with the Nikkei down 1% and the Hang Seng down 1.3%. European shares have had a muted open, trading slightly one or two tenths up as markets eagerly await the potentially key US jobs report (more below). US futures are mixed with the Dow and S&P showing very modest gains but the tech heavy Nasdaq has experienced further selling pressure following on from yesterday, down 0.3%.
Docusign slumps despite 60% increase in billing
The tech-heavy Nasdaq Composite fell hardest among the major US stock indices yesterday, ending the day 5% lower, while the Dow Jones Industrial Average was only off by 2.8%. Verizon Communications and American Express were the only two names of the 30 in the Dow to deliver a positive day. In earnings news, expectation beating results DocuSign and Broadcom failed to help the firms escape the broader sell-off. Digital contracts firm Docusign’s quarterly results, in which CEO Dan Springer said he does not anticipate a reversion to paper processes once the pandemic is over, include a 60% increase in billing during the first half of the year. Having fallen 8.7% during market hours, the stock fell another 10% in after-hours trading, although it remains up 73% over the past three months. Software and chip firm Broadcom reported revenue up from $5.2bn to $5.8bn year-over-year, towards the top end of its forecast range, but it similarly sank both during market hours and in late trading.
Meanwhile all 11 sectors in the S&P 500 were in the red, the sell-off was heavily concentrated in technology names. Overall the index was down 3.5%, but the information technology sector fell 5.8%, while some of the year’s more beaten down sectors fared better. Energy stocks were only 0.7% down on aggregate, while financials were down 1.6%. Cruise firm Carnival, investment firm Invesco – which is down 38% year-to-date – and clothing retailer Ralph Lauren led the S&P, gaining 5.2%, 4.8% and 3.6% respectively.
S&P 500: -3.5% Thursday, +6.9% YTD
Dow Jones Industrial Average: -2.8% Thursday, -0.9% YTD
Nasdaq Composite: -5% Thursday, +27.7% YTD
UK services sector accelerates recovery
Both the FTSE 100 and FTSE 250 sank on Thursday, although not to the extent of their US counterparts given the UK’s relatively short set of listed technology names. The FTSE 100 was down 1.5%, with investment trust Scottish Mortgage the biggest loser due to its mammoth stake in Tesla and other tech companies. Miners delivered a poor day too, with BHP Group, Evraz, Glenor and Anglo American all off by more than 4%. Investors had new data on the state of the UK services sector, which is a dominant part of the economy, to digest. IHS Markit’s UK services purchasing managers’ index came in at 58.8 for August, an increase on July’s 56.5 (a reading of more than 50 indicates expansion). According to Morningstar, service providers highlighted pent up housing market demand, spending driven by the government’s Eat Out To Help Out scheme and a recovery in business service demand.
FTSE 100: -1.5% Thursday, -22.4% YTD
FTSE 250: -1.4% Thursday, -20.2% YTD