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Mar 28, 2018

Asia, Europe and U.S. Stock market Report on March 28, 2018.


Tech stocks, currencies and trade in focus

Cheang Ming

Asian stocks closed lower on Wednesday trade after U.S. stocks fell sharply on the back of declines in technology names. That cut short a rally seen in Europe and Asia's Tuesday session linked to an apparent easing in trade-related tensions.
In Tokyo, the Nikkei 225 fell 1.34 percent, or 286.01 points, to close at 21,031.31, paring steeper losses of more than 2 percent seen earlier. The broader Topix was down 1.02 percent, with all but three of its 33 subindexes ending in negative territory. The mining and oil and coal sectors were particularly downbeat.
Technology stocks also contributed to the broader decline, with Tokyo Electron sinking 4.44 percent on the back of U.S. tech losses overnight.
Over in Seoul, the benchmark Kospi slid 1.34 percent to finish at 2,419.29 as technology stocks followed the lead from U.S. tech. Samsung Electronics fell 2.56 percent and SK Hynix lost 1.35 percent.
Automakers and manufacturing stocks bucked the broader fall to put in a mixed performance, with Kia Motors rising 3.94 percent.
Hong Kong's Hang Seng Index lost 1.7 percent by 3:05 p.m. HK/SIN, with the tech sector the biggest loser. Shares of index heavyweight Tencent fell 3.84 percent and AAC Technologies lost 5.93 percent ahead of the market close.
On the mainland, the Shanghai composite declined 1.4 percent to end at 3,122.22, with the index closing lower once more after breaking a four-day losing streak in the last session. The Shenzhen composite edged down by 0.95 percent to end at 1,812.36.
The blue chip CSI 300 index sank 1.8 percent, with consumer non-cyclicals and energy among the worst-performing sectors.
Down Under, the S&P/ASX 200 edged down 0.73 percent to end at 5,789.50 as all but two of its subindexes traded lower. Among sectors, consumer discretionary, materials and gold producers recorded declines of more than 1 percent, while the heavily weighted financials subindex eased 0.8 percent.

US tech sags overnight

Losses in the region came after all three major U.S. indexes closed lower, despite notching gains earlier in the session, as technology stocks weighed on the broader markets. The drop in large cap tech names saw the Nasdaq composite fall 2.93 percent.
Facebook shares tumbled after Bank of America Merrill Lynch cut its price target on the stock for the second time in five days. Other tech favorites, including Amazon, Netflix and Alphabet, also fell sharply.
Apart from tech sector troubles, trade-related issues returned to the spotlight as investors focused on a Bloomberg News report that the Trump administration was considering using an existing emergency law to limit Chinese investment in technologies regarded as sensitive.
While the report wasn't exactly "new news," given the Trump administration's recent move to block a proposed Broadcom-Qualcomm deal on national security concerns, it was "enough for investors to become defensive again," David de Garis, director of economics at National Australia Bank, said in a morning note.
Still, the overnight declines were not indicative of the broader economy, Colin Graham, CIO of multi-asset solutions at Eastspring Investments said.
"I think that the tech stocks had become detached from what's going on in the real economy ... But, for us, the underlying economy is still fine. We've seen some weakness in some of the survey data, but they're coming from very high levels," Graham told CNBC's "Capital Connection."
Stocks in Asia and Europe had bounced in the last session after U.S. and Chinese officials made conciliatory comments on Monday that suggested there could be some positive developments on trade.
In individual stocks, shares of Hong Kong-listed BYD Company sank 10.96 percent by 3:06 p.m. HK/SIN after the company reported Tuesday that its full-year profit declined 19.5 percent. It also said first-quarter net profit was expected to be pressured after a reduction in new energy vehicle subsidies.
Meanwhile, SoftBank Group and Saudi Arabia announced on Wednesday they were developing the world's largest solar power generation project, which is expected to cost $200 billion through 2030. Shares of SoftBank closed down 4.01 percent.
In currencies, the dollar index, which tracks the greenback against a basket of currencies, extended overnight gains to trade at 89.431 at 2:42 p.m. HK/SIN. The index had touched a five-week low in the overnight session.
Against the yen, the dollar firmed to trade at 105.65.
On the commodities front, oil prices extended losses after edging lower overnight. U.S. West Texas Intermediate crude futures slipped 0.93 percent to trade at $64.64 per barrel and Brent crude futures declined 0.83 percent to trade at $69.53.


European markets close mixed amid tech sell-off; Shire shares surge 14%

Sam Meredith, Ryan Browne

European markets closed mixed Wednesday, with investor sentiment dampened by sharp falls in the technology sector.

FTSE FTSE 7044.74
44.60 0.64% 786796966
DAX DAX 11940.71
-30.12 -0.25% 116903838
CAC CAC 5130.44
14.70 0.29% 105356580
IBEX 35 --- --- --- --- --- ---
The pan-European Stoxx 600 closed 0.25 percent higher provisionally, with most major bourses finishing in positive territory and sectors pointing in different directions.

Tech tanks

Technology stocks were down almost 2 percent. Investors rotated out of the sector, following an uproar over the alleged misuse of Facebook users' data by political consultants Cambridge Analytica. Electronic chip maker Austria Microsystems slumped to the bottom of the European benchmark, off more than 9 percent.
On Wall Street, stocks slipped in midday deals, also dragged down by the technology sector. Tech giants Apple and Amazon pressured the tech-heavy Nasdaq index. Amazon's stock fell after a report said that President Donald Trump wanted to "go after" the company, while Apple's dropped after Goldman Sachs analysts said they expect a decline in iPhone sales.
Back in Europe, Shire surged to the top of the index despite a Tokyo court rejecting the pharmaceutical giant's claim against a rival group's drug. A Japanese court ruled Shire's claim against Swiss drugmaker Roche's new Hemlibra hemophilia medicine should be dismissed on Wednesday, Reuters reported. The decision is thought to help clear up any legal uncertainty over the prospective blockbuster medicine. Shares of Shire finished up 14 percent on the news.
Meanwhile, Dutch consumer goods firm Unilever got a boost after UBS upgraded the stock from a "neutral" to a "buy." Shares of Unilever closed up 4.7 percent.


Nasdaq closes lower for a second day as Amazon, Netflix shares drop

Fred Imbert, Alexandra Gibbs

The Nasdaq composite closed lower for a second straight day on Wednesday as technology stocks failed to recover from steep losses seen in the previous session.
The tech-heavy index fell 0.8 percent to 6,949.23 as Amazon, Netflix and Apple pulled back 4.4 percent, 4.9 percent and 1.1 percent, respectively. At its session high, the Nasdaq rose as much as 0.4 percent.
Both the S&P 500 and Dow Jones industrial average also closed lower. The S&P 500 fell 0.3 percent to 2,605 as technology declined 0.9 percent. The Dow closed 9.29 points lower at 23,848.42 after trading in a wide range. At its session high, the 30-stock index rose as much as 234.76 points and fell 129.04 points at is low of the day.
Amazon fell after Axios reported that President Donald Trump was "obsessed" with the company. The report also said Trump wants to "go after" Amazon. Amazon's stock traded 3 percent lower in afternoon trade.
White House Press Secretary Sarah Sanders said Wednesday: "We have no announcements and no specific policies or actions that we're currently pushing forward [now on Amazon]."
Apple declined after Goldman Sachs analysts predicted lower iPhone sales in March and for the June quarter than the rest of the Street. They also cut their price target on the stock to $159 from $161.
Traders and financial professionals work on the floor of the New York Stock Exchange (NYSE) ahead of the opening bell. Drew Angerer | Getty Images News | Getty Images
Traders and financial professionals work on the floor of the New York Stock Exchange (NYSE) ahead of the opening bell.
The Technology Select Sector SPDR fund (XLK) briefly dipped into correction territory on Wednesday. The VanEck Vectors Semiconductor ETF (SMH) closed more than 10 percent below its 52-week high.
"Tech is driving the news today," said Adam Sarhan, CEO of 50 Park Investments. "What you're seeing is a rotation out of tech and into some of the more fairly and under-valued areas of the market."
Tech fell 3.5 percent on Tuesday, marking its biggest one-day decline since Feb. 8. The move lower in tech sent ripples through the entire stock market as the major averages fell more than 1 percent. The drop in the sector took place after Reuters reported Nvidia is temporarily suspending self-driving tests.
The selling was exacerbated by further pressure on Facebook shares. Reports emerged last week alleging that Cambridge Analytica, an analytics company, had gathered data from 50 million Facebook profiles without users' permission. CNN reported Tuesday that Facebook CEO Mark Zuckerberg will testify in front of Congress on the Cambridge Analytica leak.
"Big Tech is no longer a sleek, elegant black box; it is a jumble of wires that requires the constant intervention of an increasing number of humans to keep it on the rails," Nicholas Colas, co-founder of DataTrek Research, said in a note. "In short, the bloom is off the tech rose."
Investors also flocked to traditionally safer assets like bonds, pushing the 10-year Treasury yield below 2.8 percent. On Wednesday, the yield hit its lowest level in seven weeks.
Meantime, investors around the world have been keeping a close eye on global trade issues, debating what economic implications there could be if a trade war occurred between China and the U.S. This comes after Trump signed an executive memorandum that would inflict tariffs on Chinese imports — of up to $60 billion, prompting the Asian nation to retaliate.
In economic news, the U.S. economy grew by 2.9 percent in the fourth quarter, according to the final read on the U.S. economy for the period.