UPDATE: Oil price fears hit tech stocks
Published: 13 Oct 2000 10:18 BST
Share prices took a hammering Thursday, in reaction to increased tension in the Middle East, shortly after profit warnings from major high-tech companies.
The Nasdaq closed down 94 points, or 2.9 percent, at 3,074 points Thursday evening, its lowest point this year. America's Dow Jones Industrial average lost 3.6 percent to close at 10,033 points, its lowest level since March 2000.
In early trading the UK's FTSE 100 was down 31.7 at 6,100, and the Techmark 100, the index of the UK's biggest tech stocks, lost 46 points and fell to 3,355.
Markets fear that oil supplies could be disrupted by the worsening political situation in the Middle East. Tech stocks are nowhere near the levels reached before their dive earlier this year and analysts are increasingly sceptical about investment in this sector.
Analysts fear the crisis could result in a serious global stock market depression which will inevitably hit beleagured tech stocks. An overall downturn in technology stocks was worsened by recent third quarter profit warnings from some of the industry's biggest players, including Intel and Nokia. European technology companies are also feeling the pinch more than their transatlantic cousins.
Analysts say that the crisis has found tech firms at a particularly low ebb. "The [Information Technology] market has been particularly jittery over recent months," says senior analyst with Bloor Research, Tony Lock. "It is partly to do with getting back to reality, but at the moment there might be a bit of a hangover from slowing down."
Lock believes it is good to see some sense of proportion returning to the valuation of technology stocks, but says that the tech market will only rebound if the rest of the market can recover.
Hopes for a peaceful settlement between Palestinian and Israeli factions were, however, dashed Thursday by the worst episodes of violence the area has seen in years. The Middle East has reached the brink of war in the most serious crisis since the Iraqi invasion of Kuwait ten years ago.
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