Wednesday, 26 September, 2018

Asian markets plunge after record Wall Street losses

Asian markets plunge after record Wall Street losses Asian markets plunge after record Wall Street losses
Nellie Chapman | 09 February, 2018, 03:52

After its 1,175-point nosedive Monday, the Dow Jones industrial average lost 567 points right after trading began but eventually gained 567 points, adding 2.3 percent to 24,912.77.

Europe's main markets were down around 2.5 per cent.

. Trading was choppy Tuesday, which was likely to be one of the most watched days on the markets in years. Eastern time. The Dow Jones industrial average added 225 points, or 0.9 per cent, to 25,133.

The broader Standard & Poor's 500 index rose 46 points, or 1.7 percent, to 2,695.

The early gains follow the market's steepest drop in six and a half years.

The S&P 500 has fallen 7.8 percent since it set its latest record high on January 26.

The pan-European FTSEurofirst 300 index rose 2.02 percent and MSCI's gauge of stocks across the globe gained 0.06 percent.

The market seems to have taken on a mind of its own, sending Wall Street into a frenzy amid trepidation over growing interest rates. It has been an uncommonly long time since the last market correction, which ended nearly two years ago.

On Monday, the Dow finished down 4.6 percent, the biggest decline in percentage terms since August 2011, when investors were fretting over Europe's debt crisis and the debt ceiling impasse in Washington that prompted a US credit rating downgrade. Retailers including Amazon and Home Depot made small gains, a possible sign of confidence the US economy will keep growing.

Global stocks have enjoyed months of surges fueled by optimism over the US economy, corporate earnings and the global outlook. It ended the day up only 0.2 percent at 21,645.37. "There's genuine carnage out there", said Chris Weston, chief market strategist at IG in Melbourne, Australia.

A chart showing a 12-month price history of DJI closing prices. The sudden dip from early February can be clearly seen

There are signs of a reprieve in the global market sell-off. Lower interest rates hurt banks because they can not charge as much money for mortgages and other types of loans.

"People are still shaken after such a ferocious correction, especially as it came after a very long time. Consumer spending is also recovering and so the Japanese economy is stable", said Toshimitsu Motegi, the economy minister.

The Dow Jones Industrial Average fell almost 1,600 points for its biggest intraday drop in history in points terms, or more than 6 percent, before ending down 1,175.21 points, or 4.6 percent, its biggest one day fall since August 2011. Dow swings were of up to 1,000 points.

On Wednesday, benchmark 10-year notes last fell 18/32 in price to yield 2.834 percent, from 2.766 percent late on Tuesday.

Technology index Nasdaq dropped with 3.78% to 6,967.53 points. Bond prices edged lower after a big jump Monday.

Monday's drop was bad, but there were worse days during the financial crisis, including a 777-point plunge in the Dow in September 2008 that was equivalent to 7 percent - far bigger than Monday's decline. Two stocks rose for every one that fell on the New York Stock Exchange. Brent crude, the benchmark for worldwide oil prices, rose 25 cents to $67.11 a barrel in London.

Miura also pointed out that active buying was held in check toward the day's closing due to the yen's appreciation against the dollar. Technology and industrial companies and retailers moved higher, a possible sign of confidence the US economy will keep growing.

On Monday, the Dow finished down 4.6 percent, the biggest decline in percentage terms since August 2011, when investors were fretting over Europe's debt crisis and the debt ceiling impasse in Washington that prompted a US credit rating downgrade.