London morning: Nasdaq 100 down 2.90%, S&P 500 down 1.21%; Nikkei 225 off 0.34%

US stocks ended Thursday sharply lower, with the Nasdaq 100 down 2.90% and the S&P 500 down 1.21%. Asian trading on Friday was softer, and EUR/USD stood at 1.1210 at 07:00 UTC.

What happened

The S&P 500 closed at 7663.43 on Oct. 22, down 93.74 points, or 1.21%, from the previous close of 7757.17. The index measures large US companies across all sectors.

The Nasdaq 100 fell further. It closed at 28958.69, down 863.83 points, or 2.90%, from 29822.52 the session before. The index tracks the largest non-financial companies listed on the Nasdaq exchange and has a heavy weighting in technology.

The two moves differ in size. The Nasdaq 100 lost more than twice the percentage that the S&P 500 lost in the same session. In points, the Nasdaq 100 fell by 863.83 and the S&P 500 by 93.74, although the two indices stand at very different levels.

Both closing readings refer to 16:00 in New York on Oct. 22. That is the end of the regular US cash session, so these figures are the final readings for Thursday.

Asia and currencies

In Tokyo, the Nikkei 225 stood at 62693.16 at 15:25 local time on Oct. 23. That is down 214.68 points, or 0.34%, from the previous close of 62907.84. The decline was far smaller than the one on Wall Street.

The Nikkei 225 is a price-weighted index of 225 large companies listed in Tokyo. Its reading at 15:25 came shortly before the end of the local trading day, so the figure shows where the index stood late in the Asian session.

EUR/USD stood at 1.1210 at 07:00 UTC on Oct. 23. That compares with a previous close of 1.1222, a change of -0.0012, or -0.11%. The euro was marginally lower against the dollar in early European hours.

Levels in context

The previous closes give a reference for the size of the latest moves. The S&P 500 had ended Wednesday at 7757.17, and the Nasdaq 100 at 29822.52. Both indices therefore finished Thursday below the level where they started the day.

The Nikkei 225 fell by much less than the US indices. It lost 214.68 points from a previous close of 62907.84.

Across the four instruments in this morning's data, the largest move is the Nasdaq 100 at -2.90%, followed by the S&P 500 at -1.21%. The Nikkei 225 at -0.34% and EUR/USD at -0.11% moved by much less. All four instruments are lower from their previous readings.

The data also mix different kinds of reading. The two US indices are final closes for Oct. 22. The Nikkei 225 is a late-session level in Tokyo on Oct. 23. EUR/USD is where the pair stands at 07:00 UTC, so it can still change as European trading develops.

Why it matters

A decline of 2.90% in the Nasdaq 100 in one session is a large move for a major index. US closes are one reference that European and Asian participants read when their own sessions begin. No cause for the fall appears in the information available this morning, so this note does not attribute one.

The currency market showed a small reaction. A move of 0.11% in EUR/USD is modest, and the pair stayed near 1.12. The equity decline therefore did not produce a large shift in the euro-dollar rate in early trading.

The Nikkei 225 also recorded a loss, though a much smaller one than the US indices. The gap between the Tokyo move and the Wall Street move shows that the Asian session absorbed the US decline only in part by late afternoon in Tokyo.

The size of the gap between the two US indices is also worth noting. The Nasdaq 100 has a heavy weighting in technology, while the S&P 500 spans all sectors. A larger fall in the first index than in the second points to a loss concentrated more in the Nasdaq 100 than in the broad US market, although the available data do not say which companies drove it.

What to watch next

European trading begins later this morning, and the Italian Stock Exchange session runs from 09:00 to 17:30 Europe/Rome time. The first hours will show how European indices respond to the US close and to the softer Asian session.

Market participants will also follow whether the Nasdaq 100 and the S&P 500 extend or steady after Thursday's decline when Wall Street opens later today. Their closing levels of 28958.69 and 7663.43 are the reference points from the last completed US session.

EUR/USD will be tracked against its previous close of 1.1222, and the Nikkei 225 against its previous close of 62907.84 when the next Tokyo session starts. The pair stood at 1.1210 at 07:00 UTC, and the Japanese index at 62693.16 in the late Tokyo session on Friday.