A sharp decline in tech stocks, US political tension between and a ‘death cross’ on Germany’s benchmark DAX index were all weighing on sentiment. Investors are extra touchy in the lead up to Wednesday’s FOMC meeting and the first press conference from new Fed Chair Jerome Powell.
The death cross, when the 50 day moving average crosses below the two-hundred day moving average, is a technical indication that the price trend for German stocks has turned downwards.
Tech stocks saw some of the biggest declines on the day. Facebook’s (NASDAQ:FB) monopoly on personal data has put the company under the microscope again. There has been public outcry over the use of personal data harvested from Facebook data by Cambridge Analytica for use in election campaigns.
The latest data scandal might well be the straw that breaks the camel’s back for tighter industry regulation. Tighter regulation of how data is collected and used will inevitably curb growth for tech and social media companies that use the data to attract advertisers. Reports that Apple (NASDAQ:AAPL) is secretly developing its own micro LED screens for the iPhone has hurt the share prices of existing parts suppliers, notably in Asia.
Tweets from the US President imply he is the closest he has been to firing special Counsel Robert Mueller. Republicans are displeased that Mueller’s investigation appears to have morphed from a focus on Russian election collusion to a wider witch-hunt against Trump and his businesses. From a market perspective, Mueller’s investigation distracting Trump is probably less of a risk since his agenda moved from friendly tax cuts and infrastructure spending to unfriendly tariffs on international trade.
The UK tech sector had a triple whammy of bad news. The FTSE 350 Technology was down a whopping 17% in afternoon trading. Shares in the UK’s biggest tech firm Micro Focus International (LON:MCRO) halved in value after its chief executive and unexpectedly quit at the same time as the firm issued a sales warning. The record-breaking reverse merger deal with HPE has thrown Micro Focus completely off course.
The British pound was the biggest currency mover of the day, moving back above the 1.40 handle against the US dollar. The EU has agreed to the UK’s terms for a transition agreement. Having the extra two years of continuity should reduce business uncertainty and encourage investment. The unfed elephant in the room, the Irish border, capped gains for sterling. As has been the case since the EU referendum, good news for the currency was bad news for the FTSE 100 and its multinational components.
Disclaimer: The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. Losses can exceed deposits.