Nikkei plunges by over 1000 points in afternoon trading

11 October, 2018, 20:16 | Author: Regina Silva
  • US stocks are tumbling for a second straight day

Here are five things to watch ahead of Thursday's US open.

USA shares are set for big declines when markets open Thursday.

The Dow Jones Industrial Average plunged more than 800 points, led by sharp declines in technology stocks.

What will fall hardest?

But it was the rout across the Atlantic (Shanghai: 600558.SS - news) that proved even more eye-catching with the rise in US Treasury bond yields to seven-year highs seen as a key factor.

The Dow Jones Industrial Average fell 198.28 points, or 0.77 per cent, to 25,400.46.

MSCI's gauge of stock performance in 47 countries fell 2.2 percent, the pan-European FTSEurofirst 300 index of leading regional share lost 2.1 percent.

Whether the lower reading will quell expectations the Federal Reserve will hike interest rates again in December remains to be seen, said Yousef Abbasi, global market strategist at INTL FCStone in NY.

US stocks slumped on Wednesday as concerns over rising interest rates and trade tensions caused a sell-off in technology and internet stocks.

Asian markets tumbled on Thursday, after Wall Street slumped on a heavy selling of technology and internet stocks.

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USA consumer price inflation is now above 2 percent annually and the unemployment rate is the lowest in about 40 years. Wall Street extended its losses Wednesday afternoon as markets continued to skid, with the Nasdaq leading the losses.


In the 1973-74 stock market crash, for instance, the S&P 500 peaked around 700 in December 1972, and then dropped a percentage point or two nearly every month through October 1973, a 15% decline overall.

"What we're seeing here is the market positioning for potential lower growth". The Nasdaq composite dropped 173, or 2.2 percent, to 7,565. In 1987, stocks dropped more than 20 percent on a single day-Black Monday, Oct. 19-after a strong rally crashed into the Persian Gulf turmoil and trade deficits.

For stock investors, the recent spike in bond yields may be prompting some uncomfortable deja vu.

"The speed of changes in bond yields often matters more for equities than the level", Goldman Sachs strategists said in a note.

Gold rose 0.2 per cent to $1,193.40 an ounce. In Asia, Tokyo's Nikkei 225 gave up 3.9 per cent and Hong Kong's Hang Seng index shed 3.5 per cent.

It will take more than a daily stock market correction to stop the Fed from hiking, said George Goncalves, managing director and head of fixed income strategy at Nomura in NY. "The market's starting to say that the glass may be half empty".

The small-cap Russell 2000 index, which is less sensitive than its larger peers to global worries such as trade and yields, was down 1.18 percent.

It is the biggest sell-off in USA markets since February, a negative sentiment also reflected in European markets - with Paris (-2.1pc), Frankfurt (-2.2pc) and London (-1.3pc) finishing deep in the red.

Shares in upscale jewellery retailer Tiffany & Co and perfume maker Estee Lauder both fell 7 percent after a warning from French luxury goods firm LVMH about softening demand in China.

The dollar fell to 112.59 Japanese yen from 113.05 yen late Tuesday.

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