Stocks in freefall in Asia and Europe as Intel Warning Felt Globallygreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Intel Warning Felt Globally
By Edwin Chan
SINGAPORE (Reuters) - Asian stock markets slumped Friday as a global equities sell-off gathered steam and technology shares were hammered by a surprise third-quarter revenue warning from U.S. giant chipmaker Intel Corp.
Intel's first sales warning in two years, released after the U.S. stock market close, clouded the outlook for the global technology sector and knocked the wind out of chip and computer shares in Tokyo, Seoul, Taipei and Hong Kong.
The warning had also hurt U.S. technology stocks in after-hours trade, sending Intel shares tumbling 21 percent. Analysts foresaw grim sessions later Friday for European and U.S. markets.
In London, investors would focus on chip designers ARM Holdings and Imagination Technologies and fiber-optics firm Bookham Technology among others.
``The Intel warning is a major fresh negative for European markets -- I think we are in for a day of high selling pressure and high volatility,'' said Achim Matzke, analyst at Commerzbank.
Intel's warning, linked to weak European demand for its microprocessors, came amid speculation stellar growth in global microprocessor and computer demand could not be sustained.
``It's going to be ugly across the board in tech,'' said Daniel Kunstler, analyst at JP Morgan.
``You can start with semiconductors and everything from PC makers to enterprise hardware manufacturers will be affected.''
Tokyo stocks tumbled, led by semiconductor issues like chipmakers NEC Corp and Toshiba Corp. The Nikkei average ended 3.02 percent off at 15,818.25.
Hong Kong's Hang Seng Index fell 2.03 percent just after the open and extended its slide to 2.46 percent at 14,791.66 by the morning's end.
Regional markets like Seoul and Taipei, dominated by technology issues, also took a beating.
Seoul's KOSPI finished the day down 7.17 percent at 553.25, led by a struggling Samsung Electronics.
Taipei's TAIEX closed at an 18-month low of 6,612.09, off 4.46 percent on the day.
Singapore, another market rife with high-tech counters, sank 2.69 percent to 1,935.39 by midday. The Straits Times Index is now massively undersold according to its reading of 6.6 on the 14-day Relative Strength Index.
U.S. Tech Stocks Retreat
Shares of most major U.S. chip makers lost ground in after-hours trading, including Advanced Micro Devices Inc, Micron Technology Inc, Cypress Semiconductor Corp and National Semiconductor Corp.
Bellwether names in other technology sectors were also hit. Dell Computer Corp, Microsoft Corp, Cisco Systems and Hewlett-Packard Co all fell.
``Obviously this is not good news. The market is certainly not in shape to heed any of this type of negative news,'' said Peter Cardillo, director of research at Westfalia Investments.
``It's another cloud over the earnings season and obviously the markets will respond in a very negative way, at least Nasdaq will.''
``It looks like it's going to be a grim Friday.''
Thursday, a late bout of buying pushed the Dow Jones industrial average up 0.73 percent to 10,765.52. But market breadth was negative due to lingering concerns sky-high oil prices and the weakness of the euro would eat into the profits of U.S. multinationals.
About 17 stocks fell for every 11 that rose on the New York Stock Exchange (news - web sites), even as one of Wall Street's most influential market watchers, Abby Joseph Cohen, said investors' worries were ``overdone'' and would be ``short-lived.''
The technology-laced Nasdaq Composite Index fell 68.57 points or 1.76 percent to end at 3,828.87.
Both U.S. and European telecom shares had slumped on Thursday, a day after Sprint Corp and its wireless unit, Sprint PCS Group, warned their results would fall short of expectations due to fewer new subscribers and rising costs.
Telecom companies may cut back on capital spending, hurting profits at equipment suppliers like Nortel Networks and Lucent Technologies.
``September has been a bad month in terms of corporate confessionals and superimposed on that you have the energy situation and the euro situation,'' Prudential's Wachtel said.
In London, the FTSE 100 index closed at 6,199.2, down 80.7 points or 1.29 percent.
Euro Gets A Break
The euro, which has lost about 30 percent of its value since its launch 20 months ago, got a reprieve as the market turned cautious ahead of a weekend Group of Seven (G7) meeting.
Market analysts were skeptical any type of coordinated euro rescue would emerge from the meeting of G7 finance ministers in Prague. But the market was reluctant to take chances and gave the euro a break from this week's daily diet of record lows.
At 0550 GMT, the euro hovered a whisker below 86 cents, well above Wednesday's record low of 84.40 cents. Against the yen, the euro was around 91.93 yen, also above lifetime lows near 90 yen. The dollar rose to 106.90 yen from 106.54 yen.
At 0551 GMT, front-month November light crude futures last traded at $33.82 in Asia, down 18 cents from its New York Mercantile Exchange close of $34.00 per barrel.
Traders attributed the energy price drop to Democratic presidential nominee Al Gore (news - web sites)'s proposal that oil be released from the nation's Strategic Petroleum Reserve to curb high prices.
-- Carl Jenkins (Somewherepress@aol.com), September 22, 2000