Global stocks recouped some of their steep early-week falls Tuesday, after tech-sector jitters and sliding oil prices contributed to heavy selling in Asia.
U.S. stocks were set to claw back some of their losses, with futures pointing to gains of 0.5% and 0.3% for the S&P 500 and the Dow Jones Industrial Average, respectively.
European stocks rallied in the opening minutes of trading, with the Stoxx Europe 600 trading 0.5% higher. European technology stocks were up 0.5%, after the sector drove sharp falls in the U.S. on Monday and in early Asian trading Tuesday.
In Asian trading, Japan was the hardest hit, with the Nikkei 225 index falling more than 2%. Other Asian indexes staged partial recoveries, although Taiwan’s tech-dominated benchmark still closed down 0.6% and the South Korean Kospi index fell 0.4%.
The downbeat trade was sparked by Apple Inc.,AAPL -5.04% which tumbled 5% on Monday after two of its suppliers slashed their earnings outlooks, raising concerns about demand for the iPhone. The tech giant was recently up 0.3% in pre-market trading.
Japan Display Inc., which supplies screens for the iPhone XR, cut its earnings estimates, saying orders for its latest LCD panels would be much lower than its initial expectations. Its shares fell 9.5%. Other Tokyo-listed tech firms, like industrial robot maker Fanuc Corp. and electronics giant SonyCorp., fell by about 1.8% and 5.7%.
The latest wave of tech selling followed frequent turbulence last month, which hit stocks, bonds and commodities. Hedge funds around the world slid 3.1% on average in October, their worst monthly performance since September 2011, according to data provider eVestment, with investors reassessing their outlooks for global economic growth and its impact on corporate earnings.
Concerns over souring trade relations between the U.S. and China have also weighed on sentiment for both global growth and the tech sector, although those jitters were soothed late last week with a resumption in high-level talks between Beijing and Washington.
Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He on Friday about a deal to ease trade tensions ahead of a meeting between President Trump and President Xi, set for the end of the month at the Group of 20 nations summit in Buenos Aires.
But sentiment has been dealt another blow by the Trump administration’s plan to broaden its China trade battle to address intellectual property theft, investors say.
“What the White House is discussing regarding intellectual property has led to increased fears of what this means for tariffs. We seemed to have some momentum toward a deal everyone might be happy with and this has upset the apple cart a bit,” said JJ Kinahan, chief market strategist at TD Ameritrade.
The impact of statements from the White House was also registering in commodities. Brent crude was down 1.3% to $69.18 a barrel and was set to extend its losing streak after Mr. Trump tweeted that he hoped the Organization of the Petroleum Exporting Countries wouldn’t press ahead with a production cut, and that “oil prices should be much lower based on supply.”
Given expectations of a growing global oil surplus in the first half of 2019, “OPEC will likely try ignore President Trump’s call as much as possible,” ING strategists said in a note. The cartel’s monthly oil market report was due out later Tuesday.
Elsewhere, investors remained focused on the European political uncertainty that boosted the U.S. dollar to an 18-month high Monday.
Italian lawmakers were due to respond to European Commission demands for changes to its 2019 budgetary plans, while market participants were weighing U.K. Prime Minister Theresa May’s rejection of the European Union’s latest Brexit proposal.
The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was last down 0.1%, although remained 1.2% higher over the past five days.