Markets

Technology stocks rout spreads to Europe and Asia

European bonds edge higher as bull market falters

Japanese stock prices in Tokyo. Asian markets fell on Tuesday.

Tue Nov 20 2018 - 11:09

Stocks fell globally, with European and Asian equities tracking a rout in U.S. shares that appeared poised to deepen on Tuesday amid investor jitters over the technology sector and trade. Treasuries advanced and the dollar edged higher.

US equity futures pointed to a softer open, while declines in tech and bank shares pushed the Stoxx Europe 600 Index down for a fifth day, with the gauge’s technology sector set to enter a bear market. Equities fell from Tokyo to Sydney after the S&P 500 Index was dragged down Monday by US software developers and semiconductor manufacturers.

The 10-year Treasury yield slipped to about 3.04 per cent ahead of the US. Thanksgiving holiday Thursday, while core European bonds edged higher. An index of credit-default swaps on predominately high-yield companies in Europe reached the highest in almost two years, signalling renewed nerves about the asset class.

After a downdraft in October, equity markets can’t seem to catch a break this month as some of the same technology companies that helped drive the S&P 500 to a record high earlier this year tumbled amid a slowdown in consumer sales and fears over regulation.

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Alongside the stock rout a gloomy macro outlook is emerging. Ray Dalio, founder of Bridgewater Associates, the world's largest hedge fund firm, said that investors should expect low returns for a long time after years of low interest rates and quantitative easing.

"The easy days of long, global bull markets where you can invest in a tracker for five basis points – I say this as an active fund manager – and watch the thing go up, I think those days are gone," Gerry Grimstone, chairman of Barclays Bank PLC and Standard Life Aberdeen PLC, said in an interview on Bloomberg Television. "It's going to be a move back to value investing, and back to the Warren Buffett-style of investment."

Elsewhere, the pound stabilized as Theresa May appealed to business leaders to help deliver her Brexit deal, and evidence mounted that a plot to oust her as UK Prime Minister is faltering. Bitcoin fell below $5,000 for the first time since October 2017. WTI crude oil futures slipped below $57 a barrel.

- Bloomberg

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