US tech shares sell off as bitcoin soars above $11,000

A strong US economic growth report lifted the Dow to a fresh record close Wednesday, even as the tech-rich Nasdaq plunged following a sell-off in high-flying technology shares.

Meanwhile, bitcoin hogged the headlines after the virtual currency, which is not traded on world markets, smashed its way to historic peaks, racing past $11,000 a day after breaking $10,000 on a wave of feverish speculation as institutional investors looked to join the party.

Equity markets in Europe were mixed, with Paris and Frankfurt edging higher, but the FTSE in London tumbling after news reports of an impending deal on Brexit with the European Union boosted the pound.

On Wall Street, the Dow Jones index ended up 0.4 percent at a second straight record high of 23,940.68. But the tech-rich Nasdaq dived 1.3 percent, with giants like Apple, Google-parent Alphabet and Facebook losing two percent or more in a move that analysts characterized as a rotation to other sectors.

“Wednesday’s technology sell off wasn’t fueled by a particular catalyst, rather, it was the result of investors dialing back their technology holdings following an impressive year-to-date run,” said 

“Even with today’s decline of 2.6 percent, the S&P 500’s technology sector remains comfortably atop the 2017 sector standings with a year-to-date gain of 35.7 percent.”

The pound rallied on reports that Britain and the EU were close to an agreement on a breakup deal. But word that the divorce settlement could cost the country up to 55 billion euros have angered both Brexiteers and europhiles in Britain.

Sterling jumped briefly to a two-month peak of $1.3431, but lost ground after the EU’s chief Brexit negotiator Michel Barnier refused to confirm the reports which he called “rumors.” He later said the negotiations were not over.

“If this is correct then this would be a major step towards moving negotiations on to transition deals and a future trade agreement,” said Craig Erlam of forex company OANDA.

But the stronger pound, along with weakness in petroleum-linked shares ahead of Thursday’s OPEC meeting, pressured the FTSE in London, which lost 0.9 percent. 

– Bitcoin breaks $11,000 -Bitcoin meanwhile continued its record-breaking surge. The virtual currency, which has plowed to continuous records in recent weeks, finally broke $10,000 Tuesday on another volatile day.

Around 1400 GMT it soared past $11,000, before pulling back. Near 2200, it traded at $9,981 according to Bloomberg data.

The cryptocurrency hit a high of $10,903 in Asia, with some commentators suggesting it is being bought as an alternative by investors who consider mainstream global markets are valued too high.

But there is a worry that the rise — a more than tenfold surge since its 2017 low in mid-January — could result in a huge correction, analysts said.

“Clearly widespread acceptance and even adoption has aided the rally but the moves we’ve seen in recent days suggest there’s been a substantial speculative component,” Erlam said.

“I fear a substantial correction is not far away and this could be the true test of the correct value of the cryptocurrency.”

– Key figures around 2200 GMT –  New York – DOW: UP 0.4 percent at 23,940.68 (close)

New York – S&P 500: DOWN less than 0.1 percent at 2,646.07 (close)

New York – Nasdaq: DOWN 1.3 percent at 6,824.39 (close) 

London – FTSE 100: DOWN 0.9 percent at 7,393.56 points (close)

Frankfurt – DAX 30: UP less than 0.1 percent at 13,061.87 (close)

Paris – CAC 40: UP 0.1 percent at 5,398.05 (close)

EURO STOXX 50: UP 0.2 percent at 3,590.06 

Tokyo – Nikkei 225: UP 0.5 percent at 22,597.20 (close)

Hong Kong – Hang Seng: DOWN 0.2 percent at 29,623.83 (close)

Shanghai – Composite: UP 0.1 percent at 3,337.86 (close)

Pound/dollar: UP at $1.3412 from $1.3354 at 2200 GMT

Euro/dollar: UP at $1.1848 from $1.1845 

Dollar/yen: UP at 111.97 yen from 111.39 yen

Oil – Brent North Sea: DOWN 50 cents at $63.11 per barrel

Oil – West Texas Intermediate: DOWN 694 cents at $57.30 per barrel



Please peer review 3 community comments before your comment can be posted

A South African Hero: You

There’s a 99.7% chance that this isn’t for you. Only 0.3% of our readers have responded to this call for action.

Those 0.3% of our readers are our hidden heroes, who are fuelling our work and impacting the lives of every South African in doing so. They’re the people who contribute to keep Daily Maverick free for all, including you.

The equation is quite simple: the more members we have, the more reporting and investigations we can do, and the greater the impact on the country.

Be part of that 0.3%. Be a Maverick. Be a Maverick Insider.

Support Daily Maverick→
Payment options

MavericKids vol 3

How can a child learn to read if they don't have a book?

81% of South African children aged 10 can't read for meaning. You can help by pre-ordering a copy of MavericKids.

For every copy sold we will donate a copy to Gift of The Givers for children in need of reading support.