S&P500 drops 1.45%, resuming Asia's tech-sell off

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American stock indexes lost value on Tuesday as the S&P500 dropped 1.45% in trading on Tuesday, picking up on a tech-sell off that was started by Asian markets. Investors pulled back from crowded positions in the tech sector with the South-Korean Kospi index dropping nearly 10% in value. (Source: Bloomberg)

The tech-heavy NASDAQ100 lost more relative to S&P500 due to its heavy composition of technology and semi-conductor blue-chips.

Asian stock indexes struggled to post meaningful recovery on Wednesday after the previous day’s sell-off. According to CNBC, the following stock indexes performed accordingly.

• ASX 200: +0.24%
• NIKKEI: -0.88%
• NIFTY 50: +0.75%
• HSI: +0.56%
• SHANGHAI: +0.22%

Oil prices continued to cool with WTI crude, Brent crude, and Murban crude well below the $80 mark now. According to Oilprice.com, oil indexes were priced as follows:

• WTI Crude: -0.85%
• Brent Crude: -0.96%
• Murban Crude: -1.64%

Gold, which some market participants view as a store of value during periods of volatility, slipped below $4,100 per ounce.

From a sectoral perspective, ETFs defensive sectors grew on Tuesday, helping to minimize losses to the American market overall. Technology and semiconductors bled the most, losing 4.14% and 7.88% respectively while real estate, consumer staples, healthcare, and utilities all grew, according to TIKR terminal data.

In the view of SGFX research desk, typical patterns show that even in times of brief downturn, defensive sectors dispensing essential goods and services can and often do grow due to their critical role in the economy. 

• Technology: -4.14%
• Health Care: +1.41%
• Real Estate: +1.41%
• Financials: +0.34%
• Utilities: +0.78%
• Communication Services: +0.38%
• Consumer Discretionary: -1.03%
• Consumer Staples: +1.87%
• Industrials: -2.01%
• Energy: +0.74%
• Materials: -1.45%
• Aerospace & Defense: +0.18%
• Biotechnology: +0.62%
• Medical Devices: +1.61%
• REITs: +0.77%
• Semiconductor: -7.88%
• Software: +0.01%

Summary

In the view of the SGFX research desk, oil prices appear to be in a downward trend, and with geopolitical risk appearing to ease through ongoing negotiations, equities, gold, and fixed income could have room to grow, subject to earnings and capital expenditure trends.

Research references

• CNBC data
• TIKR terminal data
• Latest Oil Market Prices, News and Analysis for June 24 - Bloomberg
• Gold Price Falls Below $4,100 as Tech Selloff Triggers Investor Liquidation - Bloomberg
• US Stock Futures Drop as Megacap Tech Selloff Spreads to Asian Chipmakers - Bloomberg
• Latest Oil Market Prices, News and Analysis for June 24 - Bloomberg

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