Tech sell-off hits US stocks; Renault tumbles on CEO scandal

French President Emmanuel Macron discusses with Renault CEO Carlos Ghosn during a visit in the Renault factory in Maubeuge, France, November 8 2018. (Etienne Laurent/Reuters)

French President Emmanuel Macron discusses with Renault CEO Carlos Ghosn during a visit in the Renault factory in Maubeuge, France, November 8 2018. (Etienne Laurent/Reuters)

Worries about the US-China trade conflict and slowing technology sector growth battered Wall Street on Monday, while French auto giant Renault plunged on a burgeoning scandal surrounding Chief Executive Carlos Ghosn.

Major US indices ended sharply lower, with the Nasdaq sagging 3% amid weakness in Apple, Facebook and other prominent technology names.

The declines came after a weekend Asia-Pacific Economic Cooperation summit showcased conflict between the United States and China and as fresh US housing data showed a drop in homebuilder sentiment in November. Analysts said low trading volumes at the start of a holiday-shortened week may have exacerbated the market swing.

“The move is explained by tech stocks in general,” said Sam Stovall of CFRA Research.
“It seems that there is a reevaluation of high-flying growth stocks in general.”

The pullback follows a blowout third-quarter earnings period. Companies in the S&P 500 are on track to earn 25.7% higher third-quarter profits, according to FactSet. However, many analysts expect earnings growth to slow, in part because the one-time earnings jump from US tax cuts will be gone.

Many analysts also expect US growth to moderate. A Goldman Sachs forecast released Monday said a US recession was not expected but it predicted US growth would slow from a recent pace of 3.5% to roughly 1.75% by the end of 2019.

European stock markets also retreated, with analysts pointing to uncertainty surrounding the Brexit talks between Britain and the European Union and ongoing friction between Italy and Brussels.

Bad day for Renault

In Paris, Renault was in the spotlight. Long-term partner Nissan said it would ask its board to remove Ghosn as chairman after an inquiry uncovered “significant acts of misconduct” that included reporting less than he was earning in Japan and using company assets for personal purposes.

Renault’s share price plunged 12% at one point before recovering some lost ground to close down more than 8% at € 59.06 in Paris.

Speaking on the sidelines of a eurozone finance ministers’ meeting in Brussels, French Finance Minister Bruno Le Maire said the government would “do everything as a shareholder represented on Renault’s board to ensure operational continuity and stable governance at Renault.”

France owns a 15% stake in Renault.

Bitcoin meanwhile had another bad day, falling below the key $5 000 level for the first time since October 2017 as a broad selloff gathered steam on the opaque cryptocurrency market.

The still-nascent sector is not completely transparent and analysts have struggled to understand what precisely prompted the latest drop.

At least some of it has been attributed to a battle for control of a smaller crypto operator called Bitcoin Cash.

© Agence France-Presse