mood of Panic on the global stock market: Because of the sharp increase in Infected Numbers from South Korea, as well as the closure of a number of cities and municipalities in the North of Italy, the anxiety of investors against the possible consequences of the most serious pandemic for decades. For this reason, the Dax breaks as much as the Euro Stoxx 50. DAX 13.046,89 PTS. -532,44 (-3,92%) Xetra
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at a Similar rate, the US technology stocks, such as Apple, Amazon, or Microsoft, in recent years, the absolute Highflyer, under the wheels. A more accurate view of investors should think about the possible reasons for the change in sentiment in the sector, it is likely to have significant effects on the overall market.
U.S. Tech values are an even bigger bubble than the overall market
In the past few years, investors have scrambled to buy U.S. technology stocks because investors assumed that the business would develop well if the world economy would continue to grow only very slowly.
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The Motto here is: The weaker the world economy, the more attractive it is so-called Growth stocks, i.e. companies with strong sales growth, particularly in the Tech firms. Reminder: Due to the trade war, the world economy was no longer grown in the past year, as slow as it has been since the 2008/09er-debt crisis in the United States.
The result of the massive purchases of Tech stocks: The stock market value of Apple, Microsoft, Alphabet, and Amazon has risen to more than a trillion dollars. Including of Facebook, the five most severe values of the S&P500 for bitter 18 percent of the index weight, the highest value since the dot-com bubble in the year 2000.
The Problem: According to a study by Goldman Sachs, the quintet makes up only 14 percent of the index gain in the S&P500. The comparison of the Figures shows how strong this Tech are overrated-values, as the S&P500 is undervalued because of the massive money printing of the Fed is measured against a number of indicators, higher – i.e. a bigger bubble than ever before.
This has investors disturbed so far, but by no means. You rather buy more strong in technology shares. In the past three months have identified the five above-mentioned shares 37 percent of the total increase in the S&P500.
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Corona-pandemic will bring Japan and the USA in trouble
Even the sales warning from Apple had the Tech-values, as well as the overall market in the short term, well handled. Apple had warned that the order would paver drive for the iPhone, the production is slower than planned. On the other hand, the slowdown in China reduced the demand for Apple products.
however, After the purchasing managers indices for the industry plummeted in Japan, the third largest economy in the world, and those for the U.S. economy overall, i.e. industry plus services, in each case, surprisingly, to take the Concerns of the investors against the consequences of the Corona-pandemic rapidly. Add to that the recent news out of South Korea and Italy.
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Now the fear comes when investors suddenly that a possible recession in the US economy and the world economy would impact the business of technology companies. A recession in the global economy if the economic growth goes back to less than two percent.
Tech companies are the most dependent on China
The more investors take a look at which sectors are most from China-and business-dependent – be it on the local chains or the local market delivery. According to the Reuters news Agency, companies from the S&P500 account for only 6.2 percent of its group sales in China.
However, a manufacturer of semiconductors and their suppliers, from the S&P500 reach 29.9 percent of their revenues in China and are by far the most from the local market. The greater the threat of a setback for the companies in the sector index, the Philadelphia Semiconductor Index, which traded recently at a record high, as Intel, Advanced Micro Devices (AMD), Broadcom, Qualcomm, or Nvidia. is
On rank two follows the technology-hardware sector with a share of 14.3 percent for China. The value for Apple is around 15% for greater China, including Hong Kong and Taiwan.
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Alibaba are in trouble
How big are the risks for the technology values, the analysts ‘ conference, according to the quarterly figures from Alibaba to 13. February shown. Chief financial officer Maggie Wu had warned that the China business is expected to come in the current quarter under severe pressure, because on the one hand, many of the workers of a company are not able to come due to quarantine measures to their workplace. The burden of production and the deliveries, making the e-Commerce business of Alibaba come significantly into trouble.
on the Other hand, would occur many Chinese on the output of the brake, for example, a visit to a restaurant or traveling. Some expert speculated, therefore, is whether the turnover of Alibaba could shrink in the current quarter for the first Time since the founding of the company.
investors should retain the technology stocks, especially from the USA, right in the eye. The worse the news for Corona pandemic will be, the more the correction is likely to expand in the Growth/Tech stocks. If, however, the most important driver for the overall market, a great driver should be down, could be the turning point for a trend for the global stock market.
The more it will be arriving on the Fed and other leading Central banks, and what measures you can take to try to prevent a slump in the global stock market.
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