NEW YORK: Global equity benchmarks rebounded and the dollar dipped on Wednesday following a sharp sell-off in U.S. tech stocks that had erased more than 10% from the Nasdaq Composite Index in three days.
AstraZeneca shares bounced back from heavy losses after the Financial Times reported that global trials of its experimental COVID-19 vaccine may resume next week after an unexplained illness in a study participant. [nL4N2G636B]
The news unnerved investors in Asia hoping for the quick introduction of a vaccine that would accelerate the global economic recovery from the pandemic.
“This has been a correction that was probably not that surprising, given the move in August in the tech sector,” said Salman Baig, an investment manager at Unigestion, adding that the outlook for Big Tech was positive.
“It’s exactly those companies that are new economy – they are benefiting because of their model, the industry, the virus,” he said.
Those attributes have sparked heavy bets from the likes of SoftBank, which has traded heavily in tech stocks call options.
The bets have made investors worried about exposure to tech the sector. SoftBank Group shares lost 3% in Tokyo, extending a slump this week that has wiped $15 billion from its market capitalization.
MSCI’s gauge of stocks across the globe gained 1.47% following broad declines in Asia and rallies in Europe.
On Wall Street, the Dow Jones Industrial Average rose 439.58 points, or 1.6%, to 27,940.47, the S&P 500 gained 67.12 points, or 2.01%, to 3,398.96, and the Nasdaq Composite added 293.87 points, or 2.71%, to 11,141.56.
Despite renewed appetite for stocks, yields on safe-haven German government bonds fell to their lowest levels in two-weeks. The fall in tech shares also boosted demand for U.S. Treasuries, even though heavy supply this week is expected to weigh on the bonds.
Benchmark 10-year notes last fell 4/32 in price to yield 0.6951%, from 0.684% late on Tuesday.
The dollar index fell 0.325%, with the euro up 0.23% to $1.1806.
The remarkable rally in global shares from their March lows has been driven in part by expectations that a COVID-19 vaccine would be found.
AstraZeneca’s suspension of global trials dims prospects for an early rollout of its vaccine, described by the World Health Organization as probably the world’s leading candidate and the most advanced in terms of development.
Deutsche Bank strategists called the suspension of the trials “a blow.”
U.S. crude recently rose 3.37% to $38.00 per barrel and Brent was at $40.70, up 2.31% on the day.
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