World stock sell-off runs to $US4 trillion

Share
World stock sell-off runs to $US4 trillion

But investors' optimism waned in the afternoon and most of the early gains were pared before the closing bell, with sectors such as marine transportation, food and construction falling into negative territories. S&P and Dow futures were both up less than 0.1 percent.

Only last month the Dow and SP500 index had their best monthly gains in two years with stocks reaching record levels on January 26, supported by the benefit of cut in US corporate taxes in December, rising earnings, and healthy global economic growth.

Asian investors typically take their cue from what share prices do in America, as many Asian countries still depend on the USA economy for growth. There hasn't been one in two years, and by many measures stocks have been looking expensive.

Monday's slump in USA stocks was a break from many months of relative steady gains and left market participants grappling with an implosion of products that bet against volatility.

The past week's stomach-churning stock market losses were ignited by a sudden and contagious fear of surging inflation and higher interest rates.

All Asian regional bourses were battered on Tuesday. Taiwan shares lost 5.0 percent, its biggest since in 2011 and Hong Kong's Hang Seng Index dropped 4.2 percent.

Japan's Nikkei 225 index briefly dipped more than 7 percent and markets in Europe tumbled at the open, but investors seemed to be taking the gyrations in stride.

Germany's DAX closed up 1.60 per cent at 12,590.43. Panasonic is adding nearly 6 percent, Sony is gaining more than 4 percent, Canon is higher by more than 3 percent and Mitsubishi Electric is advancing nearly 3 percent.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan slid 3.4 percent. The VelocityShares Daily Inverse VIX Short-Term ETN (XIV) and the ProShares Short VIX Short-Term Futures ETF (SVXY), products created to return the inverse of the VIX, saw their combined value shrink to $150 million from $3 billion in after-market trading, according to estimates from Macro Risk Advisors.

The fact that stock markets have largely recovered their poise since Monday's carnage is being viewed by some as proof that the drop was simply a healthy pullback from excessively high values.

A stronger yen is bad news for profits at big Japanese exporters.

"Since last autumn, investors had been betting on the goldilocks economy - solid economic expansion, improving corporate earnings and stable inflation".

Japanese Finance Minister Taro Aso said he didn't want to comment on share prices.

CURRENCIES: The dollar strengthened to 109.63 yen from 109.36 yen. One euro reached 1.2415 dollars, compared to 1.2459 dollars for one euro on Monday.

On Wall Street, stocks saw considerable volatility over the course of the trading session on Tuesday before ending the day sharply higher. It also echoed fears investors have in the USA, where stronger wage growth has increased expectations of higher rates from the Federal Reserve.

Sydney rose 1.2 percent, Singapore climbed 0.8 percent and Seoul was marginally higher.

Only 2 S&P 500 stocks gained ground.

"Dow Jones" has followed other indexes.

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

USA crude oil fell 1.2 percent to settle at $63.39 a barrel, while Brent dropped 1.1 percent to settle at $66.86.

Craig Erlam, senior market analyst at OANDA, notes that the rally over the last couple of years has been 'very strong and without any corrections of note'. US crude hit a low of about $26 a barrel in February of that year. Oil prices have increased from about $46 a barrel in June to $65 on Wednesday.

Currency markets have been relatively quiet when compared to the action in equities and bonds, but expect the Yen to strengthen further, if stocks continue to plunge throughout the USA trading session. On Monday, it gave up $1.30 to $64.15 per barrel.

Oil prices also dropped, with global benchmark Brent futures hitting a one-month low of $66.90 per barrel on Monday.

Bond yields, which have been a key source of pressure on stocks over the week declined significantly as investors found few places to go for. Bond prices jumped after a steep decline on Friday.

It was also a wild ride for Treasuries, with United States 10-year yields diving as deep as 2.65% before a fresh sell-off dragged them back up to 2.80%. Lower interest rates hurt banks because they can not charge as much money for mortgages and other types of loans.

Share

Advertisement

Related Posts

No smartphones for N. Korea, Iran bets
Euan Graham, global security director at Australia's Lowy Institute, described the North's request fuel as a "classic tactic". That indicates North Korea doesn't always show off all of the missile technologies it's working on during its annual parades.

SPD members can vote on final coalition deal, German top court rules
Having once championed the need for Europe to help people fleeing the carnage of Syria and Afghanistan, Ms. The passionate pro-European said he wanted to become foreign minister if members ratified the deal.

These Banks Won't Let You Buy Bitcoin With Credit Card
The block is only for credit cards to prevent potential heavy losses the bank said , debit cards can still be used to buy crypto. Other cryptocurrencies have also fallen in the last few weeks after soaring, sometimes even far more than bitcoin , last year.

Watch Elon Musk Shoot Off His Falcon Heavy
Musk told CBS News that it could actually send people back to the moon and with orbital refueling, it could send people to Mars . Musk said he's using the Roadster because it's less "boring" than typical test payloads, but it's also a smart marketing ploy.

The pre-Trump Republican Party is dead
In remarks on the Senate floor, Schumer focused on the new agreement as a rare moment of bipartisanship and cooperation. Which returns us to the issue of whether enough Democrats in the House will vote for the Senate bill.

'We're in the Planning Stages': The Scoop on Trump's Military Parade
Trump has previously discussed his love of displaying military might . "I have no desire to go to a Soviet hardware display. White House press secretary Sarah Sanders said Trump asked the Defense Department to "explore" the idea of a parade.

ANC ups pressure on Zuma
This after Zuma failed to heed appeals from his comrades on Monday that he must do the honourable thing and resign. This move was seen as a major victory for the opposition who had demanded that Zuma not deliver the address.

Senate leaders' budget deal faces opposition in both parties
Senate leaders struck a budget deal on February 7, paving the way for a spending bill to avert another shutdown. The House Bill does not contain changes to United States immigration law, a key point of contention.

Crude, gasoline inventories rise, as does demand
The U.S. exported about 700,000 barrels of light domestic crude in December to the U.A.E., the Census Bureau reported Tuesday. In June, the price bottomed at $42 a barrel and then started a rally that saw it reach a three-year high of $66 last month.

Senate Strikes Bipartisan Deal to Raise Defense Spending Over 2 Years
The bill removes automatic spending cuts - known as sequestration caps - for both defense and nondefense programs. The BBC says that many Democrats are unhappy with the bill, as it fails to address the issue of immigration .

© 2015 Stocks News Daily. All Rights reserved.