Global stocks slump amid continued tech selloff

Stocks went into a skid worldwide on Friday, as Wall Street kicked off another round of tech bashing in what analysts say was an overdue correction.

The damage in United States was not as bad as Thursday, but a mixed jobs report may have softened the blow.

The broad-based S&P 500 dropped 0.8 per cent, while the tech-heavy Nasdaq Composite fell 1.3 per cent following its 5.0 per cent rout on Thursday as investors cashed in on big gains racked up in August ahead of the holiday weekend.

New York trading started slightly higher Friday after the Labor Department said that the US unemployment rate fell to 8.4 per cent in August, owing in large part to temporary hiring for the national census. But a modest overall gain in jobs indicated a slowing recovery, analysts said.

The market's retreat had been expected after the Nasdaq climbed around 80 per cent from its March trough, with more and more forecasters warning that valuations were out of sync with economic realities.

"The market was very extended coming into this and it was overdue for a pullback. It's normal and healthy," Adam Sarhan of 50 Park Investments told AFP.

"We're going see some more pullbacks (and) a steeper pullback is warranted. Stocks got ahead of themselves."

Amazon and Facebook were among the major losers in the session, dropping close to three per cent, although Apple recovered enough to close flat.

Microsoft dropped 1.4 per cent even after news just before the close that the Pentagon confirmed a $10 billion contract for the JEDI cloud computing program, despite a lawsuit from Amazon alleging bias given President Donald Trump's frequent attacks on the company and founder Jeff Bezos.

In Europe, stock markets had been boosted earlier in the day by news that Spanish banks Bankia and CaixaBank were mulling a merger.

Spanish savings conglomerate Bankia said in a statement late Thursday that it had made contact with CaixaBank "with a view to a potential merger."

The deal would create a Spanish banking titan, with more than 650 billion euros ($770 billion) of assets in a sector battered by the effect of the coronavirus on the wider economy.

Madrid's market managed to limit overall losses on the news.

Asian markets reacted to Wall Street's painful losses on Thursday by falling deep into negative territory, as profit-taking set in after months of mind-boggling gains.