December 19, 2018
Latest News

Global markets selloff picks up speed

 An electronic board showing the stock index and prices at a securities brokerage in Beijing, China, Oct. 11, 2018. EPA-EFE/ROMAN PILIPEY

An electronic board showing the stock index and prices at a securities brokerage in Beijing, China, Oct. 11, 2018. EPA-EFE/ROMAN PILIPEY

Madrid, Oct 11 (efe-epa).- A sharp selloff in United States stocks spilled over into global markets Thursday, with technology among the hardest hit again, as investors refocused on slowing global growth, rising bond yields and increasing trade tensions, according to a report from the Dow Jones Newswires made available to EFE.

The Stoxx Europe 600 slumped 1.8 percent in European morning trade, while US futures pointed to a 1.2 percent opening decline for the Dow Jones Industrial Average after the blue-chip index tumbled more than 3 percent on Wednesday.

Chinese stocks fell over 5 percent, while indexes in South Korea and Japan shed around 4 percent apiece, with declines accelerating throughout the day.

While the selloff adds to the pain that many emerging markets have felt in recent months, US stocks have largely been isolated from much of that turbulence. That changed Wednesday, with the Dow Jones Industrial Average falling 832 points, or 3.2 percent, and the tech-heavy Nasdaq Composite skidding 4.1 percent, its worst decline since June 2016, when the Brexit vote concluded.

The rotation out of tech and other growth stocks has been sparked in part by the recent jump in government-bond yields and the Federal Reserve's interest-rate increases. President Donald Trump called out the US central bank on Wednesday, saying "the Fed has gone crazy," as it continues to tighten monetary policy.

"The rise in Treasury yields has been the primary catalyst for the selloff in equities," said Steven Friedman, senior economist at BNP Paribas Asset Management, who added that higher bond yields make equities less attractive to potential buyers.

"Equity investors are growing concerned that the [Fed]'s projected rate path will choke off the expansion," he said.

The NYSE FANG+ Index – which tracks 10 global heavyweights including US and Chinese tech giants – fell 5.6 percent on Wednesday, its second-worst decline on record. It is down 10 percent so far in October.

Futures markets pointed to further declines for US technology stocks on Thursday. Amazon.com Inc. was down 2.4 percent in pre-trade, while Netflix Inc. shed 2.2 percent and Facebook Inc. fell 1.4 percent.

The rise in bond yields momentarily halted on Thursday as investors piled into havens to shelter from the turbulence in equity markets. The yield on the 10-year Treasury note declined to 3.158 percent, according to Tradeweb, from 3.221 percent on Wednesday. Yields fall as prices rise

Gold prices rose 0.6% to $1200.80 an ounce.

Bond yields across much of Europe also fell except in Italy, where concerns over the country's antiestablishment government's budget plans have sparked a selloff in recent weeks.

European technology stocks – which make up a relatively small chunk of the region's markets – were under pressure, with the Stoxx Europe 600 technology subindex down 2 percent recently. The oil-and-gas sector was down 2.7 percent amid a decline in energy prices, with Brent crude down 1.7 percent at $81.66 a barrel. Financial services firms were also under pressure.

In Asia, Tencent Holdings Ltd., the most valuable company listed in the region, fell nearly 7 percent. Other Chinese tech giants such as Baidu Inc. and Alibaba Group Holding Ltd., both of which are listed in the US, also fell sharply.

China's Shanghai Composite Index slid 5.2 percent, while the tech-heavy Shenzhen market fell 6.5 percent, taking losses to about 32 percent so far this year and making it one of the worst performers among the world's major markets. Taiwan's Taiex index, dominated by semiconductor companies and Apple Inc. suppliers, dropped 6.3 percent, its worst slide since January 2008, the Dow Jones report added.

One notable area of calm on Thursday: emerging-market currencies. The Turkish lira was up 1.5 percent against the dollar, the South African rand rose 0.6 percent and the Mexican peso gained 0.4 percent. That comes on the back of hefty losses this year for emerging markets, which have suffered amid higher US interest rates and global trade tensions.

The WSJ Dollar Index, which measures the greenback against a basket of 16 others, was down 0.2 percent.

Some investors and analysts still see reasons to be optimistic amid the equity selloff, especially on US stocks.

Ian Hui, global market strategist at J.P. Morgan Asset Management, said investors have been surprised by the speed at which bond yields have climbed, Still, sharp spikes in market volatility aren't unusual and the turbulence only tends to persist if there is an exceptional event associated with it, he said.

"We still expect equities to find their footing," said Hui.

Andrew Milligan, head of global strategy at Aberdeen Standard Investments, highlighted the significance of the US earnings season – which starts in earnest on Friday – given the expectations for solid profits growth.

"Surveys show that many investors had high cash positions at the start of the month, so those companies, sectors or markets with good valuations should receive support," he added.

Some of the largest US banks are set to release earnings on Friday including JPMorgan Chase & Co. and Citigroup Inc.

But investors also point to other risks on the horizon, with trade tensions between the US and China remaining elevated. Meanwhile, concerns are building that the falling yuan and a slowdown in the Chinese economy could spill over into global markets.

The yuan remains near its weakest level of the year in offshore markets, slightly down on the day at 6.9374 to the dollar. The yuan hasn't passed 7 to the dollar in over a decade. In 2015 and 2016 when the currency weakened sharply, the depreciation sparked capital outflows from China, an outcome that Beijing is eager to avoid this time around.

By Steven Russolillo and Mike Bird

News history
SoftBank Group's mobile unit listed in Tokyo Stock Exchange

Tokyo, Dec 19 (efe-epa).- The mobile branch of Japanese giant conglomerate Softbank debuted Wednesday on the Tokyo Stock Exchange at a price below that set...

Japan records a trade deficit of $6.55 billion in November

Tokyo, Dec 19 (efe-epa).- Japan recorded a trade deficit of $6.55 billion in November, the government announced Wednesday.

Nestle to build $154 mn plant in Mexico

Mexico City, Dec 18 (efe-epa).- Mexican President Andres Manuel Lopez Obrador announced Tuesday that global food giant Nestle plans to invest $154 million...

Trump urges US Federal Reserve to forgo rate hike

Washington, Dec 18 (efe-epa).- President Donald Trump sought Tuesday to further ratchet up pressure on the US Federal Reserve, calling on the central bank...

Natural gas crucial to Mexico's quest for clean energy

El Carmen, Mexico, Dec 18 (efe-epa).- The voluminous reserves of natural gas and its relatively low price in Mexico makes it an essential material for...

Need a waitress or dishwasher in a pinch? There's an app for that

New York City (USA), Dec 18 (efe-epa).- Imagine you're a restaurant manager and you check your phone to discover that your dishwasher, line cook and head...

EU tackles Chinese competition with multi-billion microelectronics investment

Brussels, Dec 18 (efe-epa).- The European Union's antitrust watchdog on Tuesday approved plans by France, Germany, Italy, and the UK to fund a multi-billion...

Petition on Okinawa base transfer gets over 100,000 signatures

Tokyo, Dec 18 (efe-epa).- An online petition got over 100,000 signatures Tuesday urging the president of the United States to stop the controversial...

UK government faces High Court review over fracking rules

London, Dec 18 (efe-epa).- The United Kingdom's secretary of state for business, energy and industrial strategy on Tuesday faced a judicial review brought...

Indian states announce farm debt wavier in billions of dollars

New Delhi, Dec 18 (efe-epa).- Agricultural activists on Tuesday welcomed moves by new governments in two central Indian states to waive billion-dollar farm...

Austrian chancellor urges increased investment in Africa

Vienna, Dec 18 (efe-epa).- The Austrian chancellor on Tuesday called for an increase in European investment in Africa to avoid China monopolizing its...

OPEC crude basket drops to $58.24

Vienna, Dec 18 (efe-epa).- The basket of crude oil used as a benchmark indicator by the Organization of Petroleum Exporting Countries fell to $58.24, the...

Hong Kong stock exchange closes with 1.05 percent loss

Beijing, Dec 18 (efe-epa).- The Hong Kong stock exchange Tuesday closed with a 1.05 percent loss, while its benchmark Hang Seng index fell 273.73 points to...

Shanghai stocks close with 0.82 percent drop

Shanghai, China, Dec 18 (efe-epa).- The Shanghai Stock Exchange on Tuesday dropped 0.82 percent, or 21.32 points, to close at 2,576.65 points.

Seoul stocks close 0.43 percent down

Seoul, Dec 18 (efe-epa).- Seoul Stock Exchange's benchmark Kospi index on Tuesday fell 8.98 points or 0.43 percent to close at 2,062.11 points.

Tokyo Stock Exchange closes with 1.82 percent drop

Tokyo, Dec 18 (efe-epa).- Tokyo Stock Exchange's benchmark Nikkei index closed Tuesday with a drop of 391.43 points, or 1.82 percent, to stand at 21,115.45.

IEA expects global coal demand to remain stable until 2023

Paris, Dec 18 (efe-epa).- The global demand for coal will remain stable until 2023 due to strong growth in India and Southeast Asia despite its declining...

New York Stock Exchange

New York, USA, Dec 17 (efe-epa).- Wall Street closed on Monday with heavy losses as the Dow Jones Industrial Average, its main indicator, was down 2.11...

Mexico boosts minimum wage to $5 a day

Mexico City, Dec 17 (efe-epa).- The Mexican government has reached agreement with representatives of business and labor to increase the minimum wage by...

Google to invest $1 bn in new offices in New York

San Francisco, Dec 17 (efe-epa).- Google revealed Monday that it will invest $1 billion in the construction of new offices in New York, an announcement that...

No injuries reported as fire damages private oil refinery in Brazil

Rio de Janeiro, Dec 17 (efe-epa).- A fire burned Monday afternoon at the Manguinhos refinery, located in the northern section of Rio de Janeiro and one of...

Trump advises Fed against another interest rate hike

Washington, Dec 17 (efe-epa).- US President Donald Trump advised the Federal Reserve (Fed) not to raise interest rates at its meeting this week, given the...

New book looks at Uruguay's soccer legacy

Montevideo, Dec 17 (epa-efe).- National Sports Undersecretary Alfredo Etchandy - a distinguished journalist, lawyer and writer - tells the rich history of...

Gov't starts work on rail project in poor southeastern Mexico

By Marti Quintana.

I agree Welcome to news4europe.eu. We use cookies to improve your online experience. Find out more.