(Reuters) -Chip shares dragged Asian indexes lower on Wednesday and European futures fell after growth concerns drove the steepest selloff in a month on Wall Street and investors wiped $279 billion from the value of market darling chipmaker Nvidia.
Oil hit year-to-date lows in Asia trade, the safe-haven yen rose, Japanese stocks fell more than 3% and the regional shares ex-Japan dropped nearly 2%. [MKTS/GLOB]
Here are analyst and investor comments on market moves:
BRITNEY LAM, PORTFOLIO MANAGER, MAGELLAN CAPITAL, DUBAI
“Just look at the macro backdrop, the two key pieces, as always, in the U.S. and China, in terms of tectonic plates, and both have been quite wobbly.
“If everyone has that (chip) demand priced in now, then the positioning is already there. No matter how I slice the data, expectation is priced in. Like riding any rollercoaster, you could still go up but the incremental delta is just slowing. Do you really want to stay until 5 a.m. at the party?”
TAI HUI, ASIA CHIEF MARKET STRATEGIST, J.P. MORGAN ASSET MANAGEMENT, HONG KONG
“There isn’t a clear fundamental story behind this, which means some investors are raising a reasonable and healthy question: how quickly can this whole AI development deliver? How can companies monetise it in the short term?
“I think its a fair question, and it lacks a clear answer and some people may think that valuations right now perhaps price in too much optimism. With the (ADP) job numbers tonight and on Friday, I suspect there may also be some investors just positioning potentially for a softer number.”
NICK FERRES, CIO, VANTAGE POINT ASSET MANAGEMENT, SINGAPORE
“The ISM manufacturing index poured cold water on the benign growth outlook.
“Although equities have responded enthusiastically to the dovish rate outlook … a range of key leading indicators suggest that macro conditions appear likely to deteriorate more sharply looking forward. In that context, the S&P 500 valuation multiple, equity and credit premium offer insufficient compensation for risk.
“We fear another drawdown phase over the coming weeks.”
JUN BEI LIU, PORTFOLIO MANAGER, TRIBECA, SYDNEY
“People are taking a bit of profit off.
“There’s nothing fundamentally wrong with the equity market. If anything, things are actually looking pretty good. You’ve got 25 basis point cuts to start and quite a few to follow and the economy is slowing but not collapsing.
“The next few months will probably see the bottom of earnings and for investors, in the next few months is where you deploy into a lot of those opportunities.”
STEVEN LEUNG, EXECUTIVE DIRECTOR OF INSTITUTIONAL SALES, UOB KAY HIAN, HONG KONG
“Hong Kong is pretty weak, so whenever we see a negative signal like that from the U.S., Hong Kong will be performing even worse.
“People are thinking the current situation is different to the one in August, due to the unwind of the yen carry trade. This time, it’s not because of that, it’s more because of the U.S. economy. It’s more scary, because it’s not a technical reason, it’s a more fundamental issue.”
JASON TEH, CIO, VERTIUM ASSET MANAGEMENT, SYDNEY
“The question is how fast the economy slows down while the Fed cuts rates because if they are behind the curve, then the markets will continue to sell off. It’s that tightrope right now and the market is trying to figure it out.
“When you look at Nvidia as a market leader, it’s not holding up despite very strong profits. There’s an old saying – if the troops can’t follow the generals it’s a warning sign … if the Nvidias and Apples and Microsofts cannot hold up the market, that’s it we’re in a bear market.”
MICHAEL ARONE, SPDR CHIEF STRATEGIST, STATE STREET GLOBAL ADVISORS, BOSTON
“What I expect is that we’ll see a continued rotation away from technology stocks leading the way to broader leadership. That’s happening because interest rates and inflation are both falling and that should help to close the gap in earnings growth between the technology sector and the rest of the market.”
SAM STOVALL, CHIEF INVESTMENT STRATEGIST, CFRA, NEW YORK
“I think investors just succumbed to seasonality ahead of what they fear will be a double dose of declines in an election year in both September and October, and they piled on to those stocks that had lots of profits booked.
“This may be a short week but it will be an important and crucial week one for investor confidence; people are going to remain on edge.”
STEVE SOSNICK, MARKET STRATEGIST, INTERACTIVE BROKERS, GREENWICH, CT
“There’s a bit of a post-Nvidia earnings hangover going on today. Those earnings last week were fine; they exceeded expectations. But the magnitude of the beats is shrinking quarter by quarter and that’s not lost on investors.
“There’s concern about what the job numbers are going to show, about seasonality. That’s why the VIX is higher. I don’t think the ISM number, showing a weaker manufacturing sector but higher prices, was at all helpful. And there you have it. Gravity.”
MICHAEL GREEN, PORTFOLIO MANAGER, SIMPLIFY, SAN FRANCISCO BAY AREA
“People are over-allocated to Nvidia and many of these names and they’re trying to reduce that exposure. It just has the potential for these things to sell off quite significantly.”
(Reporting by Reuters bureaux in New York and Asia; Compiled by Tom Westbrook; Editing by Sonali Paul and Christian Schmollinger)
