U.S. stocks fluctuated on Monday. While the S&P 500 Index was mostly unchanged, Nasdaq futures plummeted down by 0.8%. Analysts predict that American stocks may lose more when markets re-open on Tuesday after the Labor Day holiday. Furthermore, they are concerned about valuation, as well as extreme positions in technology stocks.
Last week, global equities collapsed to their lowest level since June. Investors worried whether valuations were reaching extremes and equities have risen too quickly. Meanwhile, U.S. technology shares showed signs of a downturn at the end of the week. They have seen a powerful rally during the pandemic. But currently, tech stocks are inching toward the red. SoftBank Group Corp. has declined by 7% after reports that the Japanese conglomerate made massive bets on tech-linked options trades.
The global economy is in only the first phase of recovery, and a major downturn is unlikely – stated Robert Greil, the chief strategist at Merck Finck Privatbankiers AG in Munich. He doesn’t consider the current situation as the start of a downturn in asset prices. According to Greil, setbacks create buying opportunities in such an environment.
How did European and Asian stocks fare?
In Asia, the MSCI Pacific Index declined by 0.3%, while the MSCI Emerging Market Index tumbled down by 0.5%. On the other hand, the Stoxx Europe 600 Index soared by 1.5%. Other European stocks also gained as investors considered the market relatively resilient to the tech-led downdraft in the United States.
On Monday, Oil collapsed due to a price reduction by Saudi Arabia, and Gold plummeted down. Treasury yields changed insignificantly. Meanwhile, Europe Stoxx 600 gained significantly across industry groups.
Thus far, the prospects of a trade agreement between Britain and the European Union look remote. Investors argued that U.K. Prime Minister Boris Johnson planned to tell the EU on Monday that he was willing to walk away rather than compromise on the core principles of Brexit.