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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.

Futures trading pointed to 1.3% falls for the S&P 500 and the Dow Jones Industrial Average, respectively. Nasdaq futures put the tech-heavy index on course for a 1.5% fall.

Nvidia Corp. and Twitter Inc. were down 2.9% and 2.8% respectively in premarket trading, echoing the heavy selling of tech stocks that has been driving global equities indexes lower.

The Stoxx Europe 600 was down 1.2% in late morning trading. Germany's DAX index was down by 1.7%, partly as a result of a 7% drop in Bayer shares, after a judge reduced the damages the German company must pay in the cancer case related to its Roundup weedkiller, but upheld the jury's finding that it acted with malice.

The Stoxx's technology sector as a whole plunged 3.9%. Austrian semiconductor firm AMS AG fell 27% 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 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.

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 at the confluence of rising 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 3.152% 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."

The Chinese yuan edged up 0.2% against the dollar, but remained close to 21-month lows.

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

President Trump said late Monday he wanted more information about the death of Mr. Khashoggi but also voiced a protective view of the U.S.-Saudi alliance.

Saudi Energy Minister Khalid al-Falih told Russia's TASS news agency Monday that there was no intention to weaponize oil prices and that production increases would proceed as planned.

The price of Brent crude oil was down 1.8% at $78.35 a barrel, having slipped 3.8% over the past week to back below the important $80-a-barrel level.

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.

Italy's FTSE MIB and London's FTSE 100 outperformed their European counterparts but were still both down by 0.6%.

In commodities, 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 07:39 ET (11:39 GMT)

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