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GLOBAL MARKETS-Tech rout roils Asian shares, oil futures extend slump

Published 2020-09-08, 09:59 p/m
© Reuters.
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* Asian stock markets: https://tmsnrt.rs/2zpUAr4

* Trading in U.S. stock options raises eyebrows

* Delay in vaccine testing hurts sentiment

* Oil futures fall sharply on worries about energy demand

By Stanley White and Jessica DiNapoli

TOKYO/NEW YORK, Sept 9 (Reuters) - Asian shares fell on Wednesday and oil prices hit lows not seen since June after a rout of technology shares sank Wall Street for a third consecutive day and a major drugmaker delayed testing of a coronavirus vaccine.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slid 1.12%. Australian stocks .AXJO dropped 2.24%, while shares in China .CSI300 fell 1.16%.

Japan's Nikkei .N225 skidded by 1.69%.

U.S. S&P 500 E-mini stock futures ESc1 fell 0.01%, but Nasdaq futures NQc1 rose 0.72%.

Sentiment for equities and other risky assets also took a hit after AstraZeneca Plc AZN.L paused a late-stage trial of one of the leading COVID-19 vaccine candidates due to an unexplained illness in a study participant. yields fell further in Asia as investors sought the safety of holding government debt. Risk aversion also pushed the yen to a one-week high against the dollar.

A sell-off in high-flying U.S. technology shares, fueled partly by concerns about excess purchases of call options, has increased the risk of a larger correction across other markets.

"The performance of Wall Street is going to leave a heavy residue, and most noteworthy is how the tech names dropped down quite aggressively. Investors will take a close note of that," said Tom Piotrowski, a markets analyst at Australian broker CommSec.

"The dramatic fall in oil prices in the last day is being seen as a proxy for global growth expectations. That 7.6% fall will certainly be resonating."

The Dow Jones Industrial Average .DJI fell 2.25%, the S&P 500 .SPX lost 2.78%, and the Nasdaq Composite .IXIC dropped 4.11% on Wall Street on Wednesday.

Among U.S. technology names, electric-car maker Tesla TSLA.O plunged 21.06% on Tuesday, its biggest daily percentage drop, after it was excluded from a group of companies being added to the S&P 500.

SoftBank Group Corp 9984.T shares fell 5% on Wednesday due to worries about the Japanese conglomerate's trading in call options on U.S. tech stocks.

SoftBank has fallen 12% since sources told Reuters and other media late last week that it built up stakes in major U.S. tech companies worth around $4 billion and bought a similar amount of call options for the underlying shares. who sold the call options to SoftBank would have to hedge their exposure by buying the underlying shares, which likely contributed to the Nasdaq .IXIC and S&P 500 .SPX reaching record highs only days ago, some traders say.

U.S. 10-year Treasury yields US10YT=RR fell to 0.6722%, while the yield curve between two-year and 10-year notes US2US10=TWEB flattened slightly, highlighting declining appetite for risk.

The British pound GBP=D3 fell to six-week lows against both the dollar and the euro.

Escalating concerns over Britain leaving the European Union without a trade agreement are weighing on sterling. dollar index =USD against a basket of six major currencies stood near a four-week high as Wall Street's sell-off and renewed fears about Brexit boosted safe-harbour demand for the greenback. futures extended their sharp decline in Asian trading to the lowest levels since June due to concern about weak global energy demand and excess supply.

Brent LCOc1 fell 0.53% to $39.57 a barrel, while U.S. crude CLc1 lost 0.68% to trade at $36.51 per barrel.

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http://tmsnrt.rs/2EmTD6j

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