Turmoil continues on US, Asian exchanges

US stock markets went through more chaos on Thursday, with the latest losses only slightly behind the record-breaking Monday trimming as concerns mount over inflation and interest rate hikes.

The Dow Jones plunged by more than 1,000 points on Thursday as turmoil continued on the New York stocks in what will likely be its worst week in two years.

The trouble continued into Friday on Asian markets, with Tokyo, Hong Kong and Shanghai exchanges all falling by more than three percentage points as investors ploughed into safe haven assets such as gold in the wake of the American sell-off.

The losses in China were particularly striking, with the Shanghai Composite Index falling by six percent and the bluechip CSI300 exchange tumbling by a similar margin.

The slump also continued in Europe on Thursday, with most key exchanges in the red. Analysts will be watching the UK’s FTSE, Germany’s DAX and France’s CAC closely on Friday for further losses.

The Dow loss of more than 1,000 points equated to more than 4 percent for the day itself and was the third fall of more than 500 points in the space of five days. The Dow Jones is now down 10 per cent from its peak on January 26.

Other US exchanges such as the tech-centered Nasdaq and the S&P 500 have also fallen sharply this week, with concerns over possible US interest rate hikes and inflation spooking investors and prompting much fevered selling.

Blue Monday, Blue Thursday

In a reflection of the dramatic week that has transpired on the exchanges, Thursday’s Wall Street losses — while being the third worst in the last five years — still only rank second for this week, with Monday’s battering the worst in percentage terms in the last five years.

The losses, euphemistically referred to as a “correction”, come in sharp contrast to the bullish trends of the market throughout 2017 and in January of this year.

The early euphoria of 2018, driven by optimism over US tax cuts, has receded in the face of mounting concerns over forthcoming changes in Federal Reserve interest rate policies.

“The sellers remain in clear control right now as a lot of the excess froth we saw in January, has now been unwound or erased,” Adam Sarhan of 50 Park Investments said.

Another significant trigger was a strong US jobs report on Friday, which prompted fears over inflation and increased borrowing costs.

 “The market had gotten way ahead of itself,” Nancy Tengler, chief investment officer of Heartland Financial, said. “When we were going up faster than we should, nobody questioned that,” she said. “When the market recalibrates, everyone becomes somewhat nervous and concerned.”

Source: dw.com