Rising interest rates, trade tensions drive another day of steep stock declines

Caution remains the key word across global markets as investors try to gauge whether the recent selloff has room to run

Caution remains the key word across global markets as investors try to gauge whether the recent selloff has room to run

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.

Investors see many of these countries as being vulnerable to higher USA interest rates, which can pull away investment dollars.

The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy. With a humming USA economy, the Federal Reserve is expected to continue hiking interest rates.

"The thing people are trying to hang their hat on is a cooler CPI read". "An oversold rally is likely to develop in the coming few days", he says.

Asian markets were broadly lower on Thursday after Wall Street slumped on a heavy selling of technology and internet stocks. The Dow Jones Small-Cap Value TSM Index closed at 9,964.36 for a loss of -207.21 points or -2.04%. All 30 of the Dow's stocks were in the red and it fell below 26,000 total points for the first time in a month, CNN reported.

This afternoon saw shares in Intel and Microsoft drop by more than 2.5 percent, while Amazon shares fell by more than 2 percent and Netflix saw a decline of 3.6 percent. Industrial and internet companies also fell hard. The Nasdaq composite rose less than a point to 7,422.

Aphria Inc., which tumbled 3.6 per cent, was among the top decliners on the main index, after the cannabis producer said there was no investment deal in place. All fell at least three per cent.

The decline came amid a widespread selloff on Wall Street, which spilled over into global markets overnight as investors reacted to the "sheer magnitude of the move", OANDA analyst Stephen Innes wrote in a note to investors. JPMorgan 's Jason Hunter thinks we may have seen the worst of the news from the bond market, as recent action leaves him "looking for yields to form a bullish reversal pattern near current levels and define the cheaper end of the fourth-quarter 2018 to first-quarter 2019 range". Markets are still rattled and they appear headed for a second day of significant losses.

Rising costs, as inflation and borrowing rates pick up, could also be a worry for stock markets. The euro rose to $1.1525 from $1.1496. The Japanese yen strengthened 0.53 percent versus the greenback at 112.36.

"The #MAGA theme is unraveling a bit over the past few sessions as two-sided risks have been injected into the USA equity market", Mark McCormick, head of North American FX strategy at TD Securities, wrote in an email.

USA crude fell 1.98 per cent to $71.72 per barrel and Brent was last at $81.30, down 2.15 per cent on the day.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.