SINGAPORE (Reuters) – Chip stocks dragged Asian indexes lower on Wednesday and European futures fell after growth concerns sparked the biggest sell-off in a month on Wall Street and investors wiped $279 billion off the value of chipmaker Nvidia.
Oil hit a one-year low in Asian trading, the safe-haven yen rose, Japanese stocks fell more than 3 percent and regional equities excluding Japan fell nearly 2 percent. [MKTS/GLOB]
Below are comments from analysts and investors on the market movements:
NICK FERRES, CIO, VANTAGE POINT ASSET MANAGEMENT, SINGAPORE
“The ISM manufacturing index poured cold water on the benign growth outlook.
“While stocks have responded enthusiastically to the prospects for dovish rates… a number of key indicators suggest that macroeconomic conditions are likely to deteriorate further in the future. Against that backdrop, the S&P 500's valuation multiple, equity premium and credit premium do not provide sufficient compensation for risk.
“We fear another phase of reduction in the coming weeks.”
JUN BEI LIU, PORTFOLIO MANAGER, TRIBECA, SYDNEY
“People are getting some benefit.
“There is nothing fundamentally wrong with the stock market. If anything, things are actually looking good. There are 25 basis point cuts to start with and many more to follow, and the economy is slowing but not collapsing.
“We'll likely see the bottom line for earnings in the next few months, and for investors, the next few months are when they'll be able to take advantage of a lot of those opportunities.”
STEVEN LEUNG, EXECUTIVE DIRECTOR, INSTITUTIONAL SALES, UOB KAY HIAN, HONG KONG
“Hong Kong is quite weak, so every time we see a negative signal like that from the US, Hong Kong will perform even worse.
“People think that the current situation is different from August, because of the unravelling of the yen carry trade. This time, it is not because of that, but rather because of the US economy. It is more frightening because it is not a technical reason, but a more fundamental issue.”
JASON TEH, CIO, VERTIUM ASSET MANAGEMENT, SYDNEY
“The question is how quickly the economy will slow as the Fed cuts rates, because if they fall behind, markets will continue to sell. We're on that tightrope right now and the market is trying to figure it out.
“If you look at Nvidia as the market leader, it's not holding up despite strong earnings. There's an old saying: if the troops can't follow the generals, that's a red flag… if Nvidia, Apple and Microsoft can't hold up, we're in a bear market.”
MICHAEL ARONE, SPDR CHIEF STRATEGIST, STATE STREET GLOBAL ADVISORS, BOSTON
“What I expect is that we will continue to see a rotation away from technology stocks and into broader leadership. This is happening because both interest rates and inflation are falling and that should help close the gap in earnings growth between the technology sector and the rest of the market.”
SAM STOVALL, CHIEF INVESTMENT STRATEGIST, CFRA, NEW YORK
“I think investors simply succumbed to seasonality ahead of what they fear will be a double dose of election-year declines in both September and October, and pounced on those stocks that had plenty of gains in store.
“This may be a short week, but it will be an important and crucial week for investor confidence; people will remain vigilant.”
STEVE SOSNICK, MARKET STRATEGIST, INTERACTIVE BROKERS, GREENWICH, CT
“There is a bit of a hangover effect from Nvidia's earnings today. Last week's results were good, beating expectations. But the magnitude of the improvements is tapering off quarter by quarter, and that is not going unnoticed by investors.
“There's concern about what the jobs numbers are going to show, about seasonality. That's why the VIX is higher. I don't think the ISM number, which shows a weaker manufacturing sector but higher prices, was of any help. And there you have it. Gravity.”
MICHAEL GREEN, PORTFOLIO MANAGER, SIMPLIFY, SAN FRANCISCO BAY AREA
“People are overexposed to Nvidia and a lot of these names and they're trying to reduce that exposure. There's potential for these things to sell off significantly.”
(Reporting by Reuters New York and Asia bureaus; Compiled by Tom Westbrook; Editing by Sonali Paul)