Wall Street’s Nasdaq deflated by tech sell-off as North Korea, vote on tax bill eyed with caution

PUBLISHED : Thursday, 30 November, 2017, 7:41am
UPDATED : Thursday, 30 November, 2017, 7:48am

A tech-sector sell-off weighed on Wall Street and on stocks globally on Wednesday, while the British pound touched a two-month high versus the US dollar as Britain and the European Union moved closer to a Brexit deal.

Traders bailed out of technology shares and bought bank stocks that rose sharply a day after the nominee to head the Federal Reserve said some regulations could be scaled back, while he acknowledged interest rates could gradually continue to rise.

“We are certainly seeing a change in leadership at least for today in that we are taking profits from technology and redistributing those profits to areas that will benefit from lower taxes, less regulation, higher interest rates and kind of later stages of the economic cycle,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.

The US Senate could vote on a tax overhaul plan as early as Thursday. The Republican plan, expected to cut many corporations’ taxes, is seen by some analysts as a boon for US stocks.

The Dow Jones Industrial Average rose 103.97 points, or 0.44 per cent, to 23,940.68, the S&P 500 lost 0.97 points, or 0.04 per cent, to 2,626.07 and the Nasdaq Composite dropped 87.97 points, or 1.27 per cent, to 6,824.39.

Emerging market stocks lost 0.45 per cent.

Despite the day’s 2.6 per cent sell-off, the S&P 500 tech sector is up over 35 per cent in 2017, by far the best performing of the 11 S&P industry sectors.

MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.25 per cent lower.

The pan-European FTSEurofirst 300 index rose 0.25 per cent and MSCI’s gauge of stocks across the globe shed 0.07 per cent after touching a record intraday high.

Traders in Asian stocks were cautious over the latest missile test by North Korea and concerns at recent softness in Chinese shares.

Donald Trump urges Xi Jinping to denuclearise North Korea, calls for more sanctions after latest ICBM test

Britain’s FTSE fell, lagging a broad-based rebound in European shares as the stronger sterling hurt the internationally-exposed companies in the index.

Sterling was last trading at US$1.3411, up 0.56 per cent on the day.

Even as the British currency hit a two-month high some investors were wary of rushing in to buy the pound until more details emerged from an EU summit on December 14-15.

“There is a lot of water that has to flow under this particular bridge before we see investors becoming optimistic about the pound in their portfolios,” said Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets.

The dollar index fell 0.02 per cent, with the euro up 0.09 per cent to US$1.185.

The Japanese yen weakened 0.39 per cent at 111.92 per dollar.

Bitcoin rose over US$11,000 to hit a record high for the sixth day in a row after gaining more than US$1,000 in just 12 hours, stoking concerns that a rapidly swelling bubble could be set to burst.

The cryptocurrency had a session high of US$11,395 and a low of US$9,250 and was last at US$9,781.09.

Oil prices fell in a volatile session on conflicting statements from oil ministers a day ahead of Opec’s meeting in Vienna, as members debate the path for an extension of the group’s agreement to cap supplies.

US crude fell 0.93 per cent to US$57.45 per barrel and Brent was last at US$63.40, down 0.33 per cent on the day.

Benchmark US 10-year notes last fell 14/32 in price to yield 2.3846 per cent, from 2.337 per cent late on Tuesday. The 30-year bond last fell 38/32 in price to yield 2.8237 per cent, from 2.765 per cent late on Tuesday.

Spot gold dropped 0.8 per cent to US$1,283.95 an ounce. US gold futures fell 0.89 per cent to US$1,283.40 an ounce. Copper lost 0.75 per cent to US$6,754.00 a tonne.