Asian shares slump as Wall St. erases all of 2018 gains

SYDNEY (Reuters) – Asian shares dived on Thursday as hundreds of billions of dollars hemorrhaged from global markets after a rout in tech stocks inflicted the largest daily decline on Wall Street since 2011, wiping out all its gains for the year.

A screen displays a chart of the Dow Jones Industrial Average on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 24, 2018. REUTERS/Brendan McDermid

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.7 percent. Japan’s Nikkei .N225 slumped more than 3 percent to hit a six-month trough and Australian shares skidded about 2 percent to a more than one-year low.

Tokyo’s Topix index .TOPX tumbled 3 percent, evaporating $155 billion in market value in the first 15 minutes of trading.

The dive in formerly high-flying U.S. tech stocks sent investors scampering to the safety of sovereign bonds, with yields in 10-year Treasuries US10YT=RR falling the most since May to 3.11 percent.

“Weak U.S. housing data, mixed corporate earnings results, trade war fears and concerns regarding a slowing global economy all contributed to the sell off,” Sydney-based Rivkin Securities said in a morning note to clients.

“Investor sentiment remains cautious as we anticipate the reports of over 100 S&P 500 companies including Amazon (AMZN.O), Alphabet (GOOGL.O) and Comcast (CMCSA.O).”

Weak readings on manufacturing in Europe added to angst over world growth, as did a surprise slump in U.S. home sales, which suggested rising mortgage rates were sapping demand for housing.

Adding to the air of tension, police intercepted suspected bombs mailed to former U.S. President Barack Obama, Hillary Clinton and other high-profile Democrats, as well as to CNN, in what New York officials branded an act of terrorism.

The growing international pressure on Saudi Arabia over the death of journalist Jamal Khashoggi also weighed on investor sentiment.

On Wall Street, disappointing forecasts from chipmakers hammered the tech sector. They followed weaker-than-expected forecasts on Tuesday from industrial giants Caterpillar (CAT.N) and 3M (MMM.N).

The Nasdaq .IXIC closed down 12.4 percent from its Aug. 29 record closing high, falling 4.4 percent for the day in its biggest one-day percentage decline since Aug. 18, 2011.

In dollar terms, the Nasdaq vaporized $524 billion in market capitalization overnight.

The Dow <.DJI > fell 2.41 percent and the S&P 500 .SPX lost 3.09 percent.

According to data analyzed by Reuters, the proportion of stocks, regions and sectors that are technically in a bear market has shot up since the start of January, prompting some analysts to conclude the bull run may already be over.

“Consensus across Citi trading floors is that recent price action is very much driven by sentiment and short-term positioning,” Citibank analysts said in a note.

“It will be the price action, less the earnings results themselves, that will indicate to investors that it might be safe to go back in the water.”

In foreign exchange markets, client participation on both spot and options was fairly light, Citi noted.

Funds flowed to the U.S. dollar and Treasuries and out of the euro and the British pound.

The euro shed 0.7 percent to $1.1397 EUR= and breached a major chart bulwark at $1.1430. It was last at $1.1401.

Against a basket of currencies, the dollar paused near a nine-week peak and was last trading at 96.351 .DXY. [USD/]

Sterling hit a seven-week trough $1.2865 GBP=, having dropped 0.8 percent overnight. It was last a shade higher at $1.2888.

The yen got the usual safe-haven bid, with the euro skidding to a two-month low at 127.68 yen EURJPY=. Even the high-flying dollar eased to 111.85 yen JPY=.

Oil prices slipped amid concerns over global growth.

Brent crude LCOc1 fell 56 cents to $75.61 a barrel, while U.S. crude dropped 56 cents to $66.26 CLc1. [O/R]

Spot gold XAU= was a tad firmer at $1,235.70 an ounce.

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