Nasdaq’s 4% slumped overnight wiped out billions of dollars of market value from global investor’s pocket, extending its losses since early October as mixed earnings report failed to meet growth expectations amidst rising input cost, weaker overseas demand and trade uncertainties.

Even after the 12 percent drop in Nasdaq Index in October, its average trailing price-to-earnings remains relatively high – at around 42 times. There is growing tendency to bring down technology companies’ valuation back to reality.

Asian markets opened in a bloodbath this morning following an ugly US session overnight, flagging fragility of the current market situation as investors were on alert on any early sign of weakness from earnings as external uncertainty rises. Rising input cost for manufacturers against the backdrop of higher tariffs alongside with rising raw material prices poked investors’ anxious nerve, triggering panic selling worldwide. Asian markets rebounded briefly yesterday before the sell side took control again, suggesting market sentiments remained weak and there is little appetite for risk.

There is a hunt for safety, suggested by falling treasury yields on Wednesday. US 10-year yield fell 6 bps to 3.105 percent level from 3.167 a day before. US dollar strengthened to its highest level seen in two months – reaffirming haven flows into the cash-likes. USD/CNH is traded at 6.9466 area, getting closer to a psychological level of 7.0. A gradual depreciation of offshore yuan is probably not a bad thing for Chinese exporters, but the side-effect on capital outflow is worth taking note of.

Technically, Nasdaq 100 Index has formed a long-range bar lower yesterday to a 61.8% Fibonacci Extension level of around 6,864 area. Breaking down below this level will lead to further downside towards 6,731 (78.6%) and 6,563 (100%) respectively. S&P and Dow have all formed similar bearish trend that there is no sign of ending the selloff any time soon.

In Singapore, the Straits Times Index gapped down 40 points to 2,990 area – the lowest level seen since Jan 2017. The selloff in local market was mainly a result of overseas market collapse, which triggered panic selling across the board. Among sectors, banks, semiconductors and offshore & marine, shipping were among the worst performers whereas defensive sectors including telco, F&B were among the less impacted group.

US NDAQ 100 - Cash

By Margaret Yang in Singapore

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. CMC Markets is regulated by the Monetary Authority of Singapore.