Overseas leads point to sharp fall on the ASX on Friday

By Meagan Evans. Published at Sep 11, 2020, in Market Wrap

Still at the centre of the market’s swings, tech stocks continued their decline overnight, coming off the record highs seen just weeks ago.

Microsoft, Amazon.com, and Apple all fell sharply, dragging the tech heavy Nasdaq down 1.99% for the day.

The major indexes across the board were all down, following a strong session on Wednesday in which they bounced back from their biggest three-day rout since March during the start of the week.

The Dow dropped 1.45%, while the S&P 500 lost 1.76% overnight — almost wiping out all of its 2% gain from the prior session.

Energy stocks were also down as oil prices extended losses. Brent crude is down 2.4% to $US39.81 a barrel and US WTI oil lost 2.6% to $US37.05.

This comes on reports that crude stockpiles increased last week, combined with forecasts for lower global oil demand.

European markets were also largely in the red overnight. The CAC 40 was down 0.38% to 5023 points, the DAX was 0.21% falling to 13,209, and the FTSE 100 lost 0.16%.

Europe is now facing a second phase of the coronavirus, with Spain hardest hit so far recording a total of half a million infections to date.

The sector was supported by Citi’s forecast that iron ore prices would trade between $US100 a tonne and $US120 a tonne this year. Iron ore is currently priced at $US126.09 a tonne.

Spot gold gained 0.8% overnight to $US1948.24 an ounce.

ASX gold stocks had a good session yesterday, Gold Road the standout, 6.2%, after reporting its inaugural half year profit.

At 8:30 AEST, the ASX200 SPI futures are down 79 points, suggesting the local market will follow overseas leads.

Like in the US, tech stocks are likely to be hit. In particular the buy now, pay later sectors continues to be volatile.

While Afterpay ended higher on Thursday, peers Sezzle, Openpay and Zip fell. Fund managers are increasingly suggesting the sector is overvalued, questioning the potential for profitability as competition increases.

The Australian dollar is currently buying 72.64 US cents.

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