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Asian and European Stocks Fall After Wall Street Slump U.S. Stocks Rebound Slightly After Tech-Driven Slump
(about 5 hours later)
FRANKFURT — Asian and European markets fell on Tuesday after a tough day on Wall Street, but they were spared the full extent of the pain felt in the United States, in part because fewer big technology names trade in those regions. FRANKFURT — Stocks in the United States were up slightly Tuesday morning after a tough day on Wall Street had sent the Standard & Poor’s 500-stock index down more than 10 percent from its recent peak.
Most markets in Asia fell after a sharp drop the day before in New York. European stocks were down less than 1 percent in morning trading, suggesting that Wall Street’s painful Monday would not turn into a global rout. Underlining that point, futures that track major United States stock indexes were modestly higher in European trading on Tuesday, meaning that many investors see a better day coming. Major global indexes followed Wall Street’s cue, trading mostly down on Tuesday, though they were largely spared Monday’s pain. European stocks were down less than 1 percent in midafternoon trading, and stocks in Asia finished the day mixed.
For the most part, global markets are responding to the same signals. Investors around the world have been unnerved by the prospect of a full-blown trade war between the United States and China as the two erect tit-for-tat trade barriers. Investors around the world have recently been reacting to the same set of uncertainties, including growing concern over the prospect of a full-blown trade war between the United States and China.
More generally, global markets have risen roughly in tandem over the past couple of years as the economies of the United States, Europe and China appeared to be humming along together at a healthy clip for the first time in years. After such a long run-up, many investors naturally wonder how much longer the good times will last. The recent downswing came on the heels of an extended period of calm in the markets. They have risen over the past couple of years as the economies of the United States, Europe and China appeared to be humming along together at a healthy clip for the first time in years.
And the markets are still up more than 20 percent since November 2016, when Donald J. Trump won the presidency — a roller-coaster ride driven in part by expectations about what his administration could bring to Washington.
But after such a long run-up, many investors have naturally begun to wonder how much longer the good times will last.
“We think the time has come to reassess the one-way bet on a continued and strengthening global economic expansion,” Carl B. Weinberg, chief international economist at High Frequency Economics in White Plains, N.Y., said in a note to clients on Tuesday.“We think the time has come to reassess the one-way bet on a continued and strengthening global economic expansion,” Carl B. Weinberg, chief international economist at High Frequency Economics in White Plains, N.Y., said in a note to clients on Tuesday.
But Monday’s slump in the United States had another driver that world markets do not: big-time technology companies. Monday’s slump in the United States, however, had another driver that world markets did not: big-name technology companies.
Amazon, Facebook, Intel, Microsoft and Tesla were among the major contributors to Monday’s stock slump on Wall Street. Amazon faces pressure from President Trump, while Facebook continues to grapple with privacy concerns and Tesla has been hit by a succession of negative headlines.Amazon, Facebook, Intel, Microsoft and Tesla were among the major contributors to Monday’s stock slump on Wall Street. Amazon faces pressure from President Trump, while Facebook continues to grapple with privacy concerns and Tesla has been hit by a succession of negative headlines.
Tech shares were among the worst performers in other markets too, like China, Hong Kong and Japan. But the world’s biggest technology companies primarily trade in the United States. Tech shares were among the worst performers in other markets too, like China, Hong Kong and Japan, though the world’s biggest technology companies primarily trade in the United States — in part to reach global investors.
China is home to digital giants like the Alibaba Group, an online retailer. But many Chinese technology companies, like Alibaba, trade in the United States as a way to reach global investors. Alibaba shares joined the American tech rout on Monday, falling more than 3 percent, while shares of the Chinese search company Baidu fell more than 1 percent. . Shares of Alibaba, a Chinese online retailer, joined the American tech rout on Monday, falling more than 3 percent, while shares of the Chinese search company Baidu fell more than 1 percent.
The woes of tech companies may even be positive for some European companies. Tesla’s battery powered cars and self-driving technology were a threat to European luxury carmakers like BMW, Daimler and Volkswagen’s Audi unit, which remain heavily invested in internal combustion engines.The woes of tech companies may even be positive for some European companies. Tesla’s battery powered cars and self-driving technology were a threat to European luxury carmakers like BMW, Daimler and Volkswagen’s Audi unit, which remain heavily invested in internal combustion engines.
But Tesla is having trouble ramping up production fast enough to meet demand, and its vehicles have suffered quality problems. Tesla’s difficulties support the argument that German carmakers have made all along: Mass producing cars is hard, and it will not be easy for new challengers to match the expertise of traditional carmakers. But Tesla has had trouble ramping up production fast enough to meet demand, and its vehicles have suffered quality problems. On Tuesday, the company reported a significant increase in the production of its Model 3 sedans in the first quarter of 2018 compared with the previous quarter, though it failed to meet previously announced production targets. The company’s difficulties have added credence to the argument that German carmakers have made all along: Mass producing cars is hard, and it will not be easy for new challengers to match the expertise of traditional carmakers.
At the very least, Tesla’s problems could buy time for established carmakers to develop their own electric vehicles and autonomous driving technology. Still, shares of German carmakers were mixed in European trading on Tuesday, as the likes of BMW, Daimler and Volkswagen depend heavily on sales in Asia and would suffer from any economic turmoil there.
Shares of BMW, Daimler and Volkswagen still fell Tuesday morning. All three depend heavily on sales in Asia and would suffer from any economic turmoil there.
One notable exception to the trend toward trading in the United States is Tencent Holdings, a Chinese social media and gaming conglomerate that trades in Hong Kong. Its shares were down less than 1 percent midday on Tuesday.