It looks set to be a day to forget for the benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) with futures contracts currently pointing to a sizeable decline at the open.
At the time of writing SPI futures are pointing to the local market opening the day a massive 109 points or 1.8% lower on Thursday following a selloff of global equities.
What happened?
Overnight there were heavy declines on London's FTSE 100, Germany's DAX, and all major U.S. indices.
In respect to the latter, the Dow Jones Industrial Average fell 3.1%, the S&P 500 dropped 3.3%, and the Nasdaq plunged 4.1% lower.
According to CNBC, both the Dow Jones and the S&P 500 posted their biggest one-day drops in eight months, while the Nasdaq index suffered its largest single day sell-off since June 2016. Rising rate fears, trade war concerns, and a rotation out of technology shares have weighed heavily on the market.
The S&P 500 Information Technology Index closed down by 4.8%, marking the biggest decline since August 2011 when the index dropped 5.3%.
This was driven largely by heavy declines from the market darling FAANG stocks. Facebook fell 4.1%, Apple dropped 4.6%, Amazon was down 6.1%, Netflix plunged 8.3%, and Alphabet (Google) tumbled 4.6% lower.
What now?
Unfortunately, this doesn't bode well for many of Australia's leading tech shares on Thursday.
If Australian investors follow suit and rotate out of tech shares and into defensive plays then it could mean the likes of Afterpay Touch Group Ltd (ASX: APT), Altium Limited (ASX: ALU), Appen Ltd (ASX: APX), WiseTech Global Ltd (ASX: WTC), and Xero Limited (ASX: XRO) suffer from heavy declines today.
While this would obviously be very disappointing for shareholders, if it does happen, I would suggest investors wait for the dust to settle and then look to see if panic selling has created a buying opportunity.
