Why did the NDX fall by 10%?

กันยายน 10, 2020
by ,

Why did the NDX fall by 10%?

This week we saw the markets in the U.S. massively in the red with tech shares plummeting rapidly. Tesla plunged 21%, Apple dropped 6.7% and Amazon also saw a fall of 4.3%. The tech sector sell-off ran for three consecutive days and the tech-heavy index, the NDX 100 suffered a 10% fall, which has been the index’s worst three-day stretch since August.

What caused the sell-off?

Reasons for the sell-off weren’t very apparent initially, however, the media have been pointing fingers at SoftBank, the Japanese company that made very large bets on the rise of equities tied to notable tech firms. We saw major reversals last week as a reaction to this, while fears rose that valuations had reached unmaintainable levels. Dealers looked to have dumped billions of dollars worth of tech stock, resulting in heavy declines on the NDX100. 

Even though the company hasn’t yet commented on the matter its shares had declined to 10%. 

The selling kicked off on the 3rd of September with the first real plunge lower. On Wednesday, it seemed that price finally started to settle after testing 10920 in previous support. 

SoftBank has been dubbed the ‘Nasdaq whale’ and it seems the company’s strategy was to take profits via the options market on underlying stocks. The company took a position on the largest tech stocks but also bought $4billion worth of options, making markets move dramatically. The tech stocks included Amazon, Tesla, Apple, Netflix and Microsoft among others. 

เวลาทั้งหมดแสดงใน AEST