Equities rebound after three-session Nasdaq sell-off

NEW YORK (Reuters) – Global equity benchmarks rebounded and the dollar dipped Wednesday after a three-day sharp sell-off in U.S. tech stocks that erased more than 10% from the Nasdaq Composite Index.

AstraZeneca (AZN.L) shares fell 1.4% after global trials of its experimental COVID-19 vaccine were paused due to an unexplained illness in a study participant. It clawed back heavier losses incurred in premarket trading.

The news had earlier unnerved investors in Asia hoping that the quick introduction of a vaccine would accelerate the recovery for global economies ravaged by the pandemic.

“This has been a correction that was probably not that surprising, given the move in August in the tech sector,” said Salman Baig, an investment manager at Unigestion, adding that the outlook for Big Tech was positive.

“It’s exactly those companies that are new economy – they are benefiting because of their model, the industry, the virus.”

Those attributes have sparked heavy bets from the likes of SoftBank, which has traded heavily in tech stocks call options.

The bets have made investors worried about its exposure to the sector. SoftBank Group (9984.T) shares lost 3% in Tokyo, extending this week’s slump that has wiped $15 billion from its market capitalization.

MSCI’s gauge of stocks across the globe .MIWD00000PUS gained 0.91% following broad declines in Asia and rallies in Europe.

In morning trading on Wall Street, the Dow Jones Industrial Average .DJI rose 248.73 points, or 0.9%, to 27,749.62, the S&P 500 .SPX gained 42.03 points, or 1.26%, to 3,373.87 and the Nasdaq Composite .IXIC added 181.30 points, or 1.67%, to 11,028.99.

Despite renewed appetite for stocks, safe-haven German government bond yields DE10IT10=RR fell to their lowest in two-weeks. The fall in tech shares also boosted demand for U.S. Treasuries, even though heavy supply this week is expected to weigh on the bonds.

Benchmark 10-year notes US10YT=RR last rose 2/32 in price to yield 0.6771%, from 0.684% late on Tuesday.

The dollar index =USD fell 0.297%, with the euro EUR= up 0.28% to $1.1812.

The remarkable rally in global shares from their March lows has been driven in part by expectations that a COVID-19 vaccine would be found, helping to accelerate the economic recovery from the coronavirus pandemic.

Yet AstraZeneca’s move dims prospects for an early rollout of its vaccine, described by the World Health Organization as probably the world’s leading candidate and the most advanced in terms of development.

Deutsche Bank strategists called the suspension of the trials “a blow”.

U.S. crude CLc1 recently rose 1.31% to $37.24 per barrel and Brent LCOc1 was at $40.06, up 0.7% on the day.

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