Stock Market News Today 2018/09/07
The Nasdaq Composite fell 0.9 per cent to 7,922.73, approaching its 50-day moving average of 7,817.29 — a key momentum level. The technology benchmark’s 1.2 per cent drop the pervious day was its biggest one-day drop since mid-August.
The Philadelphia semiconductor index lost 2.7 per cent as Micron Technology fell 9.9 per cent to $44.65 and KLA-Tencor was off 9.7 per cent, while Applied Materials declined 5.3 per cent and Advanced Micro Devices lost 2.4 per cent
Baird lowered its price target on Micron from $100 to $75 and warned of oversupply for Nand flash memory chips. Investors also cited trade tensions with China as a worry for semiconductor companies.
The tech weakness came a day after top executives from Facebook and Twitter were grilled by senators in a Washington hearing, and Jeff Sessions, US attorney-general, asked state attorneys-general to join him for talks on whether social media platforms “may be hurting competition and intentionally stifling the free exchange of ideas”.
Michael Underhill, chief investment officer at Capital Innovations, saw profit-taking after recent gains. During August, the tech sector of the S&P 500 led the benchmark’s gain with 6.7 per cent rise. Earlier this week, Amazon joined Apple as the second company with a market value topping $1tn.
“Adding fuel [to the profit-taking] is US lawmakers grilling tech executives on Capitol Hill over ethics and security issues,” he said.
Facebook fell 2.8 per cent per cent and Twitter was down 5.9 per cent. The S&P 500 fell 0.4 per cent, as Apple and Amazon lost 1.7 per cent and 1.8 per cent, respectively. The Dow Jones Industrial Average added 0.1 per cent, benefiting from its heavier weighting towards defensive healthcare and consumer stocks.
Market volatility rose, with the Vix climbing above 15 on Thursday for the first time in intraday trade since mid-August. Tech was the second worst-performing sector in the S&P 500, with a 0.8 per cent drop. Energy fell 1.9 per cent. Telecommunications, utilities and real estate were among the segments in the black.
Government bonds rallied as stocks declined. The yield on the benchmark 10-year US Treasury was down 2 basis points at 2.88 per cent. The DXY index, which tracks the dollar against a basket of global peers, was down 0.2 per cent at 95.002.
Chipmaker shares rattled by China court decision. Some Micron products said to be blocked from sale in the country in patent case order.
Shares in US chipmakers fell after Taiwan’s United Microelectronics Corporation said a Chinese court had issued an order blocking the sale of some products made by rival Micron Technology. The Taiwanese group had filed patent infringement lawsuits against Micron subsidiaries in Chinese courts earlier this year, relating to several products including some solid-state hard drives and memory sticks.
“With today’s ruling, Micron’s products now face injunction for violating UMC’s patent rights in a court verdict that applies to all of mainland China,” UMC said on Tuesday.
Micron said in a statement: “Micron has not been served with the preliminary injunction referred to in the statements issued by United Microelectronics Corporation (UMC) and Fujian Jinhua Integrated Circuit Co. (Jinhua) dated July 3. Micron will not be commenting further until the company has received and reviewed documentation from the Fuzhou Intermediate People’s Court of China.”
The ruling, which comes amid rising trade tensions between the US and China, also dinged other US chipmakers, including Intel, Nvidia, and Advanced Micro Devices.
Asia markets mixed in the morning as US-China trade war takes center stage.
Asia markets were mixed in the morning of the last trading day of the week, amid a possible escalation in the U.S.-China trade war later today.
The Nikkei 225 fell by 0.96 percent in the morning. U.S. President Donald Trump had hinted to columnist James Freeman that Japan could be next in the trade cross hairs of America, according to a Wall Street Journal article.
South Korea’s Kospi saw a recovery from its earlier losses but still traded down by 0.15 percent, with chipmaker SK Hynix down by 4.19 percent following the recent sell-off in U.S. tech stocks. Down Under, the ASX 200 continued the downward trend by sliding 0.73 percent. The Greater China stock indexes largely bucked the overall trend by trading in positive territory during the morning, with Hong Kong’s Hang Seng index edging up by 0.62 percent. The Shanghai composite was also up by 1.13 percent while the Shenzhen composite saw gains of 1.275 percent.
The ongoing U.S.-China trade war could also see an escalation amid already tense relations between the two economic powerhouses, following reports which said the Trump administration could place tariffs on an additional $200 billion worth of Chinese goods as soon as a public comment period ends at 12:00 p.m. HK/SIN on Friday. China’s commerce ministry has said the country would retaliate if the U.S. imposes new tariffs.
ANZ Research Chief Economist (Greater China) Raymond Yeung said in a report on Friday that the latest round of U.S. tariffs is “not an end point.”
“We believe the US government will continue to escalate the scale and scope of trade and investment measures against China, The Trump administration is not simply targeting the bilateral trade balance between the US and China. If it is, the trade friction would have been eased back in May,” he wrote.
“The administration’s policy towards China is also targeting other aspects such as technology transfer, and the ultimate objective is to ensure that the US remains the largest economy in the world,” he said, adding that this policy direction is unlikely to change even after the U.S. midterm elections in November.
Meanwhile, negotiations between the U.S. and Canada are still underway as the two parties seek to come to an agreement on the future of the North American Free Trade Agreement. The talks are expected to continue and could potentially last weeks.
The U.S. dollar index, which tracks the greenback against a basket of currencies, was at 95.032 as of 9:48 a.m. HK/SIN, off its high from yesterday. The Japanese yen pared some of its gains against the dollar but was still up at 110.58 while the Australian dollar weakened at $0.7188, as of 9:50 a.m. HK/SIN.
Oil markets saw gains in the morning of Asian trade. The global benchmark Brent crude futures were up slightly at $76.54 per barrel. U.S. West Texas Intermediate crude futures also saw an increase of 0.12 percent at $67.85 a barrel.