Saturday, 24 February, 2018

Markets Right Now: Dow falls another 500, then recovers

Asian shares mirror Dow comeback, dollar steady | Miami Herald Markets Right Now: Dow falls another 500, then recovers
Nellie Chapman | 09 February, 2018, 07:25

Yesterday, on February 5, 2018, stocks saw their largest single-day losses for the Dow (in terms of points) since August 2011. Brent crude, the global standard for oil prices, gave up 70 cents, or 1.1 percent, to $64.81 per barrel in London. Spot gold dropped 0.9 percent at $1,313.67 per ounce.

What began as a Wall Street plunge spread into Asian trading on Tuesday with the Nikkei 225 falling almost 4.8% from close to close.

Major indexes in Asia and Europe took steep losses and US markets started sharply lower, only to repeatedly change direction.

U.S. stocks went into "free fall" yesterday, sparking large scale sell-offs on Asian markets this morning.

"We certainly could be looking at a market that's going to have to get more comfortable with the potential for a higher rate of inflation and potentially higher interest rates".

The S&P/TSX composite index was up 14.03 points, or 0.09 per cent, to 15,349.90, after 90 minutes of trading, boosted by the health-care sector which includes the volatile marijuana space.

How are global markets reacting?

While there are no assurances these defensive stocks will not drop in price, these are traditionally companies that investors seek as safe havens in times of market turmoil and when they would rather not put their money into low-yield fixed income investments.

Meanwhile, in Egypt, one of the largest consumer markets in the region, the EGX30 was trading 2 per cent lower and the EGX50 was down 3 per cent.

USA stocks were pummeled on Monday, with the Dow falling nearly 1,200 points, the biggest single-day point drop in its history.

The S&P 500 was up 19.78 points, or 0.73 per cent, at 2,714.92, while the Nasdaq Composite was up 17.09 points, or 0.24 per cent, at 7,132.97.

The Dow and the S&P 500 are both 10 per cent below the record highs the indexes set just two weeks ago, putting them in what is known on Wall Street as a "correction". Australia's benchmark S&P/ASX 200 lost 3.2 percent.

On Monday, the Dow finished down 4.6 percent while the S&P 500 sank 4.1 percent.

That has fed into widespread concerns that markets were stretched following a strong run over the past year that pushed many indexes to record highs.

The S&P 500 has fallen 7.8 percent since it set its latest record high on January 26. All this suggests that the stock market will have to chop sideways for a while and consolidate earnings performance before investors will offer even higher prices for stocks. "South Korean markets started higher in the morning but investors are more anxious that US markets will see further sell-offs tonight". That strong pay data sparked fears of coming wage inflation, which intensified worries that the Federal Reserve might need to hike rates more often this year than the three times it had originally signaled.

Also Wednesday, U.S. crude oil added 29 cents to $63.68 a barrel in electronic trading on the New York Mercantile Exchange. Strong economic performance and prospects with the then-recent U.S. tax reforms had fuelled a bull market which saw the measure's value rocket up 1,000 points in 12 days.

In currency trading, the dollar fell to 109.02 yen from 109.54 yen late Tuesday. The euro dipped to $1.2394 from $1.2399.

The Dow's point loss would be its biggest of all time, though in percentage terms, its 5.6 percent decline wasn't as big as its worst drop during the financial crisis.