Losses on Wall Street ripple through Asia; stocks slump

Traders working on the floor of the New York Stock Exchange on Oct 10 2018 in New York City

European shares hit their lowest in more than 20 months on Thursday following a rout on Wall Street as jitters over rising U.S. Treasury yields and signs of slowing global growth sparked a broad selloff of risky assets.

The Shanghai Composite index plunged 5.2 per cent to its lowest level since November 2014 and Japan's Nikkei 225 fell by an unusually wide margin of nearly 4 per cent. Markets across Southeast Asia recorded similar declines.

Markets in Hong Kong, South Korea, Australia and Southeast Asia recorded similar declines.

Investors are wary of possible further USA interest rate hikes.

A high reading could fuel expectations that the Federal Reserve will keep raising its interest rates at a steady pace, reining in the easy money policy that had fueled stock markets in recent years. "I just think it's natural to see bonds rally after a big equity move".

Wall Street's troubles caused turmoil in worldwide markets overnight.

The big USA technology stocks that have been the engine behind a multi-year bull market posted heavy losses overnight but clawed back some losses on Thursday.

The shift higher in yields also threatens to suck funds out of emerging markets, putting particular pressure on the Chinese yuan as Beijing fights a protracted trade battle with the US.

US officials have accused China of meddling in its midterm elections and stealing trade secrets from its companies through spies.

The International Monetary Fund cut its outlook for global growth this week, citing interest rates and trade tensions.

Tokyo's Nikkei 225 gave up 3.9 percent to 22,590.86 and the Shanghai Composite lost 5.6 percent to 2,573.11.

P fell 2.4 percent, financial services.SXFP tumbled 2.9 percent and insurers.SXIP lost 3.1 percent. Australia's S&P/ASX 200 slipped 2.4% to 5,906.00.

While Wall Street staged a partial recovery on Thursday, it did not pull Europe up in its wake, with some analysts saying European stocks were still catching up with the fall in the United States.

Most sectors in Europe traded in the red, with tech stocks bearing the brunt of selling pressure after the big overnight sell-off in US technology shares. The index suffered its worst loss in eight months on Wednesday. The Nasdaq composite index was off 43 points beflore climbing the same amount and the S&P 500 was down 15 before edging into positive territory.

The Russell 2000 index of smaller-company stocks shed 2.9%, to 1,575.41.

Apple and Amazon, the two most valuable companies in the S&P 500, each had their worst day in 2½ years. Apple slipped by 4.6 per cent while Amazon lost 6.2 per cent.

Amazon has soared 50% this year, but its stock has fallen 14% from its all-time high in early September.

Francis Tan, an investment strategist at UOB Private Bank, believes that the markets will pick up in the USA session.

"The valuation of U.S. stocks, especially tech stocks, is still pretty high and there could be some profit taking actions now", Mr Tan explained.

The dollar rose to 112.34 yen from 112.27 yen late Wednesday. The euro rose to $1.1547 from $1.1523.

Oil futures fell. US crude gave up $1.39 to $71.78 a barrel.

A television screen on the trading floor of the New York Stock Exchange shows the plunging numbers for the Dow Jones industrial average, March 22, 2018, as investors feared trade tensions will spike between the USA and China. Brent crude, the global standard, dropped 76 cents to $82.33 a barrel.

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