TWTR Twitter Inc

By David Hodari 

Stocks sold off around the world Tuesday, with technology shares plunging amid resurgent fears about the health of China's economy and a slew of geopolitical concerns.

U.S. futures pointed to 1.3% falls for the S&P 500 and the Dow Jones Industrial Average. Nasdaq futures put the tech-heavy index on course for a 1.5% loss at the opening bell.

Shares in heavy industrials and machining firms 3M Company and Caterpillar Inc. plunged 7.4% and 6.1% respectively in premarket trading after their third-quarter earnings missed expectations. Weak results from those companies will do little to reassure investors about the health of global economic growth.

Shares in Nvidia Corp. fell 3.4% and Apple Inc. was down and 1.5% in premarket trading, echoing the heavy selling of tech stocks that has been driving global exchanges lower.

The Stoxx Europe 600 was down 1.2% in late morning trading. Germany's DAX index fell 1.9%, partly as a result of a 9.2% drop in Bayer shares after a judge reduced the damages the German company must pay in the cancer case related to its Roundup weedkiller. However, the judge upheld the jury's earlier finding that it acted with malice.

Italy's FTSE MIB and London's FTSE 100 were both down by 1% and 0.4% respectively.

The Stoxx's technology sector as a whole plunged 3.7%. Austrian semiconductor firm AMS AG fell 25% after it surprised investors with weak fourth-quarter guidance, while French IT firm Atos dropped 23% after slashing its forecasts.

Downbeat European trading followed heavy selling in Asia-Pacific, where investors reversed the broader market rally that came on Friday and Monday amid anxieties about Chinese economic growth. Index heavyweight Tencent Holdings fell 4.6%.

In China, the Shanghai Composite Index and the Shenzhen A Share closed down 2.3% and 1.9% respectively. Sinking financial stocks dragged Hong Kong's Hang Seng down 3.1%. Indexes across the rest of the region suffered heavy losses, with the main benchmarks in Japan, South Korea and Taiwan slumping 2% or more.

Investors were keeping a close watch on rising tensions between the U.S. and Saudi Arabia following the death of Saudi dissident journalist Jamal Khashoggi.

The price of Brent crude fell 2.1% to a month-low of $78.13 a barrel, having dropped 4% over the past week to back below the important $80-a-barrel level. That slip came after Saudi Energy Minister Khalid al-Falih told Russia's TASS news agency on Monday that Saudi Arabia had no intention of weaponizing oil prices and that Riyadh will proceed as planned with production increases.

Renewed pessimism about global tech stocks came after the U.S. sector ended a run of three consecutive sessions of selling Monday. Investors have turned their backs on riskier sectors such as technology in recent weeks as they have found themselves facing higher U.S. bond yields, U.S.-China trade tensions and worries about global economic growth.

Those factors have combined to give investors a "glass half-empty" approach to the current earnings seasons, according to Ronan Carr, equities strategist at Bank of America Merrill Lynch. "Globally, results haven't been bad, but the companies that miss are getting hammered and even the ones that beat expectations have been underperforming in the 24 hours after publishing."

Analysts cite rising bond yields as one factor behind the wild equities swings of recent weeks, although those moves have softened.

The yield on 10-year U.S. Treasurys edged lower to 3.146% from 3.196% late Monday. Yields and prices move in opposite directions. But, while that move is to be expected from debt markets, "a growth scare coming down the line is very bad for equities market," Mr. Carr said.

The steep fall in Chinese stocks marked a U-turn from the Shanghai index's sharpest two-day rise since 2015, which came as investors parsed reassuring comments by key government and central bank officials about the health of Chinese economic growth.

The People's Bank of China late Monday moved to support financing for private firms, but the central bank's measures "are far from sufficient to solve [those companies'] broad financing difficulties," Citi economists said in a note.

Coming after government proposals to cut income tax, analysts are uncertain whether such moves will prevent Chinese growth from decelerating further.

"We're asking whether China is doing stimulus by a thousand cuts but I'm still very skeptical," said Ian Samson, markets research analyst at Fidelity International. "The ongoing slowdown is quite natural but it will continue to weigh on global growth."

Market participants were also keeping an eye on the Italian government's budget talks with European lawmakers -- the two parties remained on a collision course -- and the U.K.'s contentious Brexit negotiations.

The price of gold was up 1% at $1,234.08 a troy ounce.

Write to David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

October 23, 2018 08:37 ET (12:37 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.