Shares are pointing lower after a rally in US Big Tech unravelled in the final hour of trade.
The S&P/ASX 200 looks set to unwind much of yesterday's 58-point advance at today's open following a major reversal in the tech giants that have spearheaded Wall Street's recovery since March. ASX SPI200 index futures slumped 45 points or almost 0.8 per cent.
A volatile reversal session saw the Nasdaq Composite rise 1.95 per cent to a new record before plunging to a closing loss of 227 points or 2.13 per cent as the FAANG group of tech leaders - Facebook, Amazon, Apple, Netflix and Google parent company Alphabet - haemorrhaged gains. The S&P 500 shed 30 points or 0.94 per cent. The Dow, which had been up as much 563 points, finished 11 points or 0.04 per cent ahead.
The performance gap between the three major indices had blown out in recent weeks as the post-March recovery narrowed and became heavily concentrated in a handful of stocks. Those include companies whose business models have weathered the pandemic best: so-called stay-at-home stocks such as Netflix, Facebook and Amazon. Last week's 4 per cent surge in the tech-heavy Nasdaq significantly outpaced weekly gains of 1.8 per cent for the S&P 500 and 1 per cent for the Dow Jones Industrial Average.
The scale of last night's reversal was summed up by the fortunes of electric carmaker Tesla, whose shares ended 3.1 per cent in the red after being up as much as 16.2 per cent. Netflix lost 4.2 per cent, Facebook 2.5 per cent and Amazon 3 per cent.
"No sentient human could look at some of the super-cap tech stocks and say the latest move wasn’t anything other than a momentum-driven melt-up rally," Adam Crisafulli of Vital Knowledge told CNBC. "This isn’t to say the gains aren’t real and anyone recommending a more cautious view has obviously been wrong, but investors need to realize 'growth' right now is like a game of musical chairs with 100 players and 3 chairs.”
The market rallied earlier in the session after the Food and Drug Administration granted "fast-track" status to two vaccine candidates developed by Pfizer and German partner BioNTech. The companies expect to start new trials this month on 30,000 subjects. Pfizer shares gained 4.1 per cent and BioNTech 10.6 per cent.
The rally began to unravel after California ordered a shutdown of indoor businesses to slow the spread of COVID-19. Governor Gavin Newsom said indoor operations at restaurants, wineries, cinemas, bars, zoos and museums should close immediately. Hospitalisations in the US's most populous state have increased by 28 per cent in a fortnight.
Solid gains in Australian mining giants BHP and Rio Tinto in UK action as iron ore kicked higher were overshadowed by reversals in the US. BHP's US-listed stock ended 0.59 per cent lower following a 2.39 per cent rise in its UK stock. Rio Tinto eased 0.25 per cent in the US after rising 3.12 per cent in the UK. The spot price for iron ore landed in China jumped $4.80 or 4.5 per cent to US$111.85 a dry ton.
Oil declined amid reports a Saudi Arabian-led group of major producers was pushing OPEC to ease production caps introduced to support flagging prices at the height of the pandemic. Brent crude settled 52 cents or 1.1 per cent lower at US$42.72 a barrel.
Copper hit its highest level in two years as major producer Chile battled strikes and supply problems due to the coronavirus. Benchmark copper on the London Metal Exchange climbed 2.5 per cent to US$6,580 a tonne. Nickel gained 1.5 per cent, lead 1.4 per cent, zinc 3.2 per cent and tin 0.8 per cent. Aluminium slid 0.2 per cent.
Gold logged its first advance in three sessions. Gold for August delivery settled $12.20 or 0.7 per cent ahead at US$1,814.10 an ounce.
The dollar dropped 0.13 per cent to 69.39 US cents.
The US corporate earnings season cranks into gear tonight with reports due from Citigroup, JPMorgan Chase, Wells Fargo and Delta Air Lines.