Asian shares follow Wall Street lower, virus concerns weigh heavy

Daniel Fowler
September 10, 2020

"We certainly could fall more". Japan's Nikkei skidded 1.12 percent.

Tesla plunged 17.47%, its biggest daily percentage drop in nearly six months, as the electric-car maker was excluded from a group of companies being added to the S&P 500.

Nasdaq futures (NQ=F): 11,404.50, up 11.75 points, or 0.1%.

"The market was sprinting so fast and it just seemed very reasonable for it to pause and catch its breath and decide what it wants to do next - and that's where we are today", said Lawrence Creatura, a portfolio manager at PRSPCTV Capital LLC.

Investors moved into the perceived safety of US government bonds. Risk aversion also pushed the yen to a one-week high against the dollar.

"I think the market will shrug this off as electioneering but may find the lining up of technology stock sellers harder to process as the US market returns from a holiday yesterday", said Chris Bailey, European Strategist at Raymond James.

Tesla Inc TSLA.O tumbled as much as 20% on Tuesday after its surprise exclusion from the S&P 500 index added to the broader sell-off in technology stocks, which have dominated Wall Street's recovery from the coronavirus-driven crash earlier this year.

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Global markets have recovered most of this year's losses, but that was based largely on strong gains for tech stocks while other companies are lower.

The Dow Jones Industrial Average rose 210.82 points, or 0.77 percent, at the open to 27,711.71.

Tesla shares tanked in pre-market trade on Tuesday after the stock was left out of the S&P 500 index.

Energy shares slumped 3.71 percent as oil prices fell below 40 a barrel USA dollars. This third day of heavy selling has driven the tech-heavy index down more than 8 percent from the record high set on September 2nd.

The carmaker reported its fourth quarterly profit in a row in July and its much-hyped "Battery Day" event, to be held later this month, may also have boosted optimism since many investors expect the company to unveil new technologies that day.

Tesla has been a standout performer in the US stock market this year, soaring 400% through Friday's close - the second best performance in the Nasdaq 100 Index behind Zoom Video Communications Inc. Such concerns have sent the pound tumbling and it is sitting around six-week lows against the dollar. Investors are also keeping track of trade talks between Britain and the European Union after Boris Johnson's government introduced legislation that intentionally breaches its obligations regarding Northern Ireland in the withdrawal treaty. Wall Street's fear gauge climbed for the third time in four sessions.

Oil futures extended their sharp decline to the lowest levels since June due to concern about weak global energy demand and excess supply. Brent crude, the worldwide standard, declined 13 cents to $40.66 per barrel in London.

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