ASX Futures down 98 points as NASDAQ falls 4%, Tesla crashes 21%

The Australian sharemarket started strongly on Tuesday before dipping early in the afternoon, only to stage a significant recovery in the last hour that saw the S&P/ASX 200 index (XJO) push above the 6000 point mark, closing up 63 points at 6008 points, a gain of 1.1%.

There were strong performances across a number of sectors, but companies exposed to the iron ore price traded strongly with Fortescue Metals Group leading the way as it gained 3.5%.

The big banks were all up more than 1%, while CSL continued its strong run as it gained more than 2%.

After a horror finish last week, the XJO has added 82 points over the last two days, but with the ASX SPI200 Futures index down 98 points to 5888 points all of these gains could be eroded in what is shaping up as a challenging day.

Based on market developments overnight, our recently in favour tech stocks could be in for a hiding with the NASDAQ having shed 4.1%.

Tesla Inc placed a significant drag on the index as it was dumped by investors, falling 21% or US$88 per share to US$330 per share.

Weakness in equities markets and commodities

However, it wasn’t just the NASDAQ that felt the pain in the US as the Dow shed 632 points or 2.2% to close at 27,500 points.

After being the talk of the town for the last few weeks, the S&P 500 gave up 95 points or 2.8% to close at 3331 points, returning it to early August levels prior to its record-breaking run.

Other big tech companies caught up in the sell-off were Apple Inc (-6.7%) and Microsoft Corp (-5.4%).

As investors looked to escape the dismal environment they found solace in watching movies and eating burgers with Walt Disney (+1.7%) and McDonald’s Corp (+0.9%) two of only a handful of blue-chip stocks to gain any significant ground.

While the extent of the losses weren’t as severe in Europe, it was all red ink.

Mainland Europe was hardest hit with the DAX and the CAC 40 down 1% and 1.6% respectively.

The FTSE 100 held up reasonably well, coming off only 0.1% to close at 5930 points.

However, given about 50% of the Dow’s decline occurred in the last two hours of trading, European markets would have closed before the real carnage unfolded.

As well as poor leads from overseas, weakness in commodities could put equities markets under further pressure today.

Oil was a real casualty with the Brent Crude Oil Continuous Contract falling about 5% to close at US$39.78 per barrel, the first time in nearly 3 months that it has traded below US$40 per barrel.

There was little movement in the gold price as it continued to hover in the vicinity of US$1940 per ounce.

Iron ore was also unmoved as it sat just shy of US$130 per tonne.

Base metals all trended lower with zinc and lead the hardest hit with the latter falling more than 2% as it returned to early August levels of US$0.86 per pound, down from nearly US$0.90 per pound at the start of September.

Zinc fell more than 3% to US$1.09 per pound, a level it hasn’t traded at since mid-August.

In the wake of these developments the Australian dollar has fallen substantially against the US dollar, and it is now fetching US$0.72, down from around US$0.73.