Scoreboard: Nasdaq nerves

Wall Street slumped as a fall in jobless claims failed to ameliorate another big sell-off in the tech sector.

Tech stocks continued to sell off aggressively overnight, dragging down other US benchmarks in what was a sizeable sell-off. That the carnage came despite a solid drop in jobless claims shows you just how strong the momentum is here. Jobless claims fell to 300,000 in the week to April 5, down from 332,000 the week prior. But the algorithms ignored that and momentum continued to drive stocks down. Tech stocks may have led, initially, with biotech and internet stocks in particular bearing the brunt, but as trading went on, the tech route morphed into a broad-based sell-off. Every sector on the S&P500 was weaker with only 2 per cent of stocks on that index recoding an increase.

Equities slumped on Wall Street as mentioned -- and moves were huge. The Nasdaq led, with a 3.1 per cent fall to 4054, the largest drop since November 2011. The S&P500 wasn’t too far behind with a 2.1 per cent fall -- the biggest drop in about two months, while the Dow lost 266pts to 16,170. Over in Europe, losses weren’t as severe but the offer was certainly on. At the close the Dax lost 0.6 per cent as did the CaC. The FTSE actually outperformed that with a comparatively hefty 0.1 per cent gain.

Commodities had a mixed session, precious metals benefitting from some safe haven buying -- gold up $14.6 to $1320, while silver rose 1.4 per cent. Copper didn’t do too badly otherwise, brushing off the weaker Chinese trade numbers which were distorted by invoicing problems (imports of metals surged in any case). Finally crude was weaker -- Brent off 0.4 per cent to $107.4, while WTI fell 0.3 per cent to $103.3.

Forex markets didn’t see a lot of action relative to equities. The euro was a bit higher, but not much -- maybe 30 pips or so to 1.3885. Similarly, the British pound was unchanged at 1.6783 and the yen is at 101.5. As for the Australian dollar, it held up above 94 US cents but only just, at 0.9412 at the time of writing.

Rates eased again overnight as safe haven flows saw a broad-based lift in US Treasury prices. The US 10-year yield fell another 2 bps to 2.66 per cent, which brings the fall in the 10-year yield over the last week or so to 14 bps. The 5-year yield lost just under 2 bps to be at 1.58 per cent, while the 2-year sits at 0.35 per cent. Aussie futures in turn were up 1 tick on the 3s to 96.95 and 2.5 ticks on the 10s to 95.965 -- not sure how to juggle the Treasury rally with stronger domestic jobs growth and weaker Chinese trade numbers.

Elsewhere, there wasn’t much in the way of data. US import prices rose 0.6 per cent in March, after a 0.9 per cent increase the month prior. Then over in Europe, the Bank of England kept rates unchanged and opted not to print more money, or rather increase the amount they print. Finally the Greeks managed to tap the market -- first time in four years -- for €3 billion in 5-year bonds (at 4.75 per cent). Ninety per cent of the issue went to investors outside of Greece.

In markets today, the SPI points to a 1 per cent slump for the All Ords. In terms of the dataflow there isn’t much for Australia, while for the region the key release will be China’s inflation figures at 1130 AEST. Tonight US data includes construction output, producer prices and the preliminary estimate for consumer confidence (April) from Michigan University.

Have a great day…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.

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