Asia: Shares slump as Wall St erases all of 2018 gains

[SYDNEY] Asian shares dived on Thursday as hundreds of billions of dollars haemorrhaged from global markets after a rout in tech stocks inflicted the largest daily decline on Wall Street since 2011, wiping out all its gains for the year.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7 per cent. Japan's Nikkei slumped more than 3 per cent to hit a six-month trough and Australian shares skidded about 2 per cent to a more than one-year low.

Tokyo's Topix index tumbled 3 per cent, evaporating US$155 billion in market value in the first 15 minutes of trading.

The dive in formerly high-flying US tech stocks sent investors scampering to the safety of sovereign bonds, with yields in 10-year Treasuries falling the most since May to 3.11 per cent.

"Weak US housing data, mixed corporate earnings results, trade war fears and concerns regarding a slowing global economy all contributed to the sell off," Sydney-based Rivkin Securities said in a morning note to clients.

"Investor sentiment remains cautious as we anticipate the reports of over 100 S&P 500 companies including Amazon, Alphabet and Comcast."

Weak readings on manufacturing in Europe added to angst over world growth, as did a surprise slump in US home sales, which suggested rising mortgage rates were sapping demand for housing.

Adding to the air of tension, police intercepted suspected bombs mailed to former US President Barack Obama, Hillary Clinton and other high-profile Democrats, as well as to CNN, in what New York officials branded an act of terrorism.

The growing international pressure on Saudi Arabia over the death of journalist Jamal Khashoggi also weighed on investor sentiment.

On Wall Street, disappointing forecasts from chipmakers hammered the tech sector. They followed weaker-than-expected forecasts on Tuesday from industrial giants Caterpillar and 3M.

The Nasdaq closed down 12.4 per cent from its Aug 29 record closing high, falling 4.4 per cent for the day in its biggest one-day percentage decline since Aug 18, 2011.

In dollar terms, the Nasdaq vapourised US$524 billion in market capitalisation overnight.

The Dow fell 2.41 per cent and the S&P 500 lost 3.09 per cent.

According to data analysed by Reuters, the proportion of stocks, regions and sectors that are technically in a bear market has shot up since the start of January, prompting some analysts to conclude the bull run may already be over.

"Consensus across Citi trading floors is that recent price action is very much driven by sentiment and short-term positioning," Citibank analysts said in a note.

"It will be the price action, less the earnings results themselves, that will indicate to investors that it might be safe to go back in the water."

In foreign exchange markets, client participation on both spot and options was fairly light, Citi noted.

Funds flowed to the US dollar and Treasuries and out of the euro and the British pound.

The euro shed 0.7 per cent to US$1.1397 and breached a major chart bulwark at US$1.1430. It was last at US$1.1401.

Against a basket of currencies, the dollar paused near a nine-week peak and was last trading at 96.351.

Sterling hit a seven-week trough US$1.2865, having dropped 0.8 per cent overnight. It was last a shade higher at US$1.2888.

The yen got the usual safe-haven bid, with the euro skidding to a two-month low at 127.68 yen. Even the high-flying dollar eased to 111.85 yen.

Oil prices slipped amid concerns over global growth. Brent crude fell 56 cents to US$75.61 a barrel, while US crude dropped 56 cents to US$66.26.

Spot gold was a tad firmer at US$1,235.70 an ounce.

REUTERS