TRaiders blame the “little crash” for the sudden 0.5% drop in European stocks this afternoon as the US also looks set to open lower.
After opening today, the FTSE 100 broke through 7,000 points, rallying 0.7%, before abandoning all of its gains by midday and finding itself trading flat. The story is about the same in Europe, where the German Dax fell 1.8% and the French Cac – 0.65% by 22:15.
Meanwhile, Wall Street is gearing up for a similar decline, with futures dropping the Nasdaq 0.82%, the Dow 0.4% after yesterday’s 0.7% jump, and the S&P shedding 0.5%.
A global shortage of microprocessors has put pressure on stocks in tech companies and automakers. Investors also appear to be awaiting Friday’s US nonfarm payrolls data, which is expected to show significant job growth in April.
Abundant stimulus measures, early vaccination campaigns and flexible policies from the Federal Reserve have sparked a strong recovery in the US economy and pushed Wall Street to record heights this year. However, the so-called “pandemic winners” have recently begun to lose popularity.
“While metropolitan tech companies have been a key part of portfolio stability throughout the pandemic, we believe investors should be careful not to reallocate resources in this part of the market,” wrote Mark Hefele, Chief Investment Officer, UBS Global Wealth. Management. in the customer note.
“With growth accelerating, we continue to favor cyclical and value-based sectors such as finance and energy.”