Stock markets Dow Jones suffers worst day in over six years as global stock markets plunge The Dow Jones industrial average dropped 4.6% as investors fled amid fears of rising interest rates: This was volatility unleashed Stock market sell-off: live updates Phillip Inman and Edward Helmore Mon 5 Feb 2018 23.48 GMT First published on Mon https://www.renderosity.com/?uid=892315 5 Feb 2018 15.27 GMT Share on Facebook Share on Twitter Share via Email View more sharing options Share on LinkedIn Share on Pinterest Share on Google Share on WhatsApp Share on Messenger Close Traders on the floor of the New York stock exchange on Monday when the Dow Jones plunged. Photograph: Richard Drew/AP US stocks took a further steep plunge on Monday with the Dow Jones industrial average dropping 1 175 points the largest one-day points fall on record and erasing all the gains made so far this year. Why are global stock markets falling? Read more The drop came after another bad day on global markets as investors reacted to global equity losses overnight and concern that central banks will increase interest rates in response to inflationary pressures from surging global economies. The Dow dropped 1 600 points in one instance before bouncing back. The index is now off more than 1 800 points over two days of trading. Global stock markets have shown little volatility over the last few years amid a period of unprecedented low interest rates that followed in the wake of the great recession. But on the day that new Federal Reserve chair Jerome Powell took office replacing Janet Yellen that quiet period seemed to be over. This was volatility unleashed said Jack Ablin chief investment officer at at Cresset Wealth. It s partially fear of interest rates partially this new Fed chairman Jerome Powell partially the market is overvalued relative to fundamentals. While market fear may not be based in any change in economic fundamentals in its last meeting under chair Yellen the Federal Reserve indicated it expects inflation pressures to increase through the year. According to projections released in December officials expect three rate hikes in 2018 so long as market conditions remain broadly as they are but some economists believe the central bank could add another increase at its final meeting of the year. If the market falls continue they could prove problematic for Donald Trump who has consistently touted record high stock markets as proof that his presidency is boosting the economy. US stocks have now lost 1tn in value in the first five days of February. However the White House responding to the market drop insisted on Monday night that long-term economic fundamentals remain exceptionally strong . Donald J. Trump (@realDonaldTrump) Dow S&P 500 and Nasdaq all finished the day at new RECORD HIGHS! pic.twitter.com/wJyB9d00hh November 28 2017 The plunge initially triggered by fears that strong US employment numbers would lead to wage demands and rising inflation represents the first two-day drop of 1 000 points or greater for the Dow since August 2015. The sell-off was reflected on other US indexes with the S&P 500 also recording its steepest drop since 2015 and erasing its gains for the year. The sell-off represents a stark turnaround in market sentiments said Ablin. In the middle of last month optimism bullishness and complacency was at an all-time high. It s certainly fearful now said Ablin. In London shares in Britain s top 100 publicly listed companies on Monday suffered their worst single-day slump since Theresa May called the snap election last April. The index of Britain s top 100 companies stretched its longest losing streak since last November into a fifth day following a 1.3% fall. The FTSE 100 index tumbled to 7 345 having peaked at almost 7 800 last month. Why are global stock markets falling? Read more Hussein Sayed the chief market strategist at currency dealer FXTM said investors were nervous about the prospect of higher interest rates. The era of cheap money is ending and for markets who got addicted to it it s undoubtedly bad news he said. The Fed is expected to react to survey data published last week showing that average US wage growth hit 2.9% in January and could go above 3% in the next few months. Wage increases are one of the main components pushing up prices in US shops. Stock markets remain high globally and the economies of most of the world s biggest countries are robust. But fears about the pace of rate increases and the size of the US s ballooning deficit have worried some investors. Last week a member of the Fed s main interest-rate setting committee Robert Kaplan suggested that rates could increase by more than 0.75 percentage points this year if the economy maintains its fast rate of growth and wages continue to rise strongly. He said: You will see some inflation pressure this year. I believe that the Fed should be removing accommodation gradually but deliberately. Mark Haefele the global chief investment officer of wealth management at UBS said the bond market which trades in government and corporate debt remained steady despite recent declines in values that increased the likelihood of defaults. He said stock market investors should sit tight while bond yields which measure the risk attached to each bond remained modest. We don t believe that now is a time to reduce exposure to stocks. Greg McBride chief financial analyst at Bankrate said: Markets have been addicted to low interest rates and global central banks pumping money into the financial system. As economies around the world are improving this means higher interest rates and less stimulus from central banks. That s why investors are throwing a hissy-fit. Not because anything is wrong. Far eastern markets fell overnight by the most in over a year with the Nikkei among the worst affected following a 2.5% drop to 22 682. The price of a barrel of Brent crude oil slid to 67.30 from above 70 in the middle of last month. The FTSE s fall was limited by worse than expected economic data that sent the pound down to 1.40 from 1.42 overnight. Car registrations in the UK slumped by 6% in January and the Markit/CIPS survey of the services sector recorded its worst level of growth for 16 months. Many of the UK s biggest businesses earn the majority of their income in dollars and any increase in the dollar s value versus the pound increases their profits. Last month Trump boasted that the stock market was a measure of his successful first year in office. When the market reached 25 075 on 5 January an increase of more than 1 000 points in little over a month He said: Record fastest 1000 point move in history. This is all about the Make America Great Again agenda! Jobs Jobs Jobs. Six trillion dollars in value created! Topics Stock markets Global economy Interest rates FTSE Dow Jones Federal Reserve news Share on Facebook Share on Twitter Share via Email Share on LinkedIn Share on Pinterest Share on Google Share on WhatsApp Share on Messenger Reuse this content
Photo Credit The New York Times Since the global financial crisis a decade ago a few simple guidelines have helped investors make sense of the markets.Global growth and inflation will be perpetually weak. Central banks will help by keeping interest rates low. And stocks will almost invariably rise.The rule book is now changing a shift that is sending tremors through the financial markets. The Standard & Poor s 500-stock index fell by more than 4 percent on Monday deepening its losses from the previous week and erasing its gains for the year. The Dow Jones industrial average sank by 4.6 percent. 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sans-serif;font-size:15px;font-weight:500;line-height:1.5;text-transform:uppercase;display:inline-block;vertical-align:top;width:100% .viewport-medium .nyt-markets .mkt-index-list .mkt-index font-size:16px;width:auto;margin-right:1.6em .nyt-markets .mkt-index-list .mkt-index .percent font-weight:400;margin-left:0.4em;color:#777 .nyt-markets .mkt-index-list .mkt-index .percent:before content: ;display:inline-block;border-left:.375em solid transparent;border-right:.375em solid transparent .nyt-markets .mkt-index-list .mkt-index .status margin-left:8px;font-size:10px .viewport-medium .nyt-markets .mkt-index-list .mkt-index .status display:block;margin-left:0px .nyt-markets .mkt-index-list .mkt-index.up .percent color:#3C8A37 .nyt-markets .mkt-index-list .mkt-index.up .percent:before margin-right:0.2em;border-bottom:.75em solid #2CB224;border-top:0 solid transparent .nyt-markets .mkt-index-list .mkt-index.down .percent color:#A81817 .nyt-markets .mkt-index-list .mkt-index.down .percent:before margin-right:0.15em;border-top:.75em solid #BF0100;border-bottom:0 solid transparent .nyt-markets .mkt-index-list .mkt-index.closed color:#777 .nyt-markets .mkt-index-list .mkt-index.closed .percent color:inherit .nyt-markets .mkt-index-list .mkt-index.closed .percent:before border-bottom-color:#BBB;border-top-color:#BBB #briefing-market-module.interactive-embedded min-width: 0; max-width: 500px; margin-top: 4px; padding: 0; #briefing-market-module.interactive-embedded .interactive-graphic margin: 0; #briefing-market-module.interactive-embedded .interactive-caption display: none; Market Snapshot View Full Overview Those sharp moves come as investors digest the growth prospects for the world and rebalance their views on the relative merits of stashing their cash in risky assets like stocks safer spots such as government bonds and the myriad investment opportunities offered by a global economy moving in sync. Advertisement Continue reading the main story The world s largest economies are all expanding as the most important central bank the United States Federal Reserve is draining billions of dollars from the financial system and raising interest rates. And investors are concerned that tenuous signs of inflation could mean central banks around the world will start to remove their support even faster. Photo A trader on the floor of the New York Stock Exchange on Monday. The S.&P. s 4.1-percent drop was the worst since August 2011. Credit Richard Drew/Associated Press It s an interesting complexity for investors to assess. What s good for the economy isn t always good for the markets. The strong job report last week fueled hopes that wage growth would follow. But higher wages could lead to higher inflation creating new challenges for the central bank to manage. Continue reading the main story
NEW YORK: US stocks saw the biggest one day fall in six years on Monday as investors rushed to take profits after bond yields rose sharply last week following an equities rally to record levels in January.The Dow Jones Industrial Average fell nearly 1 600 points for its biggest intraday drop in history in points terms or more than 6.0 percent before ending down 1 175.21 points or 4.6 percent for it s biggest one day fall since Aug. 2011.Only last month the Dow and S&P500 index had their best monthly gains in two years with stocks reaching record levels on Jan. 26 supported by the benefit of cut in U.S. corporate taxes in December rising earnings and healthy global economic growth.But with the Federal Reserve seen likely to raise short term interest rates again three or four times in 2018 bond yields have been rising and last Friday s healthy U.S. labour market report sparked fears of rising inflation leading to Monday s sharp bout of profit taking. It looks to me like a typical type of scenario when you see a single stock flash crash where you ll see bids just disappear stop orders get kicked said Joe Saluzzi co-manager of trading at Themis Trading in Chatham New Jersey. The overall market could have taken a cue from some of the bigger names. The CBoe Volatility index closed at its highest since August 2015.Selling https://www.freelancersunion.org/members/account/raj-nadh/ hit all S&P sectors though the S&P financial index down 5.0 percent was the biggest daily percentage decliner followed by healthcare down 4.6 percent.The Dow Jones Industrial Average fell 1 175.21 points or 4.6 percent to 24 345.75 the S&P 500 lost 113.19 points or 4.10 percent to 2 648.94 and the Nasdaq Composite dropped 273.42 points or 3.78 percent to 6 967.53.The pan-European FTSEurofirst 300 index lost 1.51 percent and MSCI s gauge of stocks across the globe shed 2.96 percent.After rising sharply last week U.S. Treasury yields fell from four-year highs on Monday as the selloff in equity markets sparked demand for low risk debt.Benchmark U.S. 10-year note yields surged to 2.885 percent overnight the highest since January 2014 following data Friday that showed hourly wages rose in January.The 10-year notes were last up rose 38/32 in price to yield 2.7093 percent down from 2.852 percent late on Friday.The U.S. dollar rose against a basket of currencies as the U.S. bond market selloff levelled off.The dollar index rose 0.45 percent with the euro last down 0.61 percent to 1.2384.In commodities U.S. crude fell 1.99 percent to 64.15 a barrel while Brent fell 1.4 percent to 67.62.Oil prices settled more than 1.0 percent lower pressured by rising U.S. output and other factors. CommentsClose X Spot gold steadied at 1 334.40 an ounce. Thomson Reuters 2018(Except for the headline this story has not been edited by NDTV staff and is published from a syndicated feed.)
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