Heavy selling pressure piled more pain on global stocks yesterday, putting them firmly on track for their worst weekly performance in years, as analysts wondered whether an overdue correction was rapidly turning into an equity market bloodbath.
Europe’s key markets extended the recent days’ downturn to show substantial losses at the close following another spectacular drop in Asian shares.
London’s FTSE 100 closed 1.3% down at 7,077.94 points, Frankfurt’s DAX 30 ended 1.3% down at 12,107.48 points and
Paris’ CAC 40 finished trading 1.4% down at 5,079.21 points, while the EURO STOXX 50 shed 1.5% at 3,255.99 points.
US stocks attempted a timid recovery in morning business on Wall Street, but then slumped, only to gyrate a few more times between negative and positive territory, leaving traders with few clues as to how New York’s trading day may end amid such staggering volatility.
Both the Dow and the S&P 500 indices are 10% or more down from their recent peaks, placing them in what market players call “correction” territory: more than temporary weakness, but less than a “bear market” or possible crash.
“How long can the sell-off last? That is the million — if not billion — dollar question,” Fawad Razaqzada at Forex.com summed up market sentiment, saying that the absence of massive buyers at current low price levels was a worry.
“No one can say for sure, but things don’t look pretty out there given that the sharp falls haven’t been bought this time around. So, things could get ugly really quick,” he said.
In Europe, Frankfurt has also lost around 11% from its summit levels, while London and Paris, each down around 9% from recent peaks, have fared only slightly better.
But while key European markets now all stand several percentage lower than they did three months ago, the Dow is still more than a percent up over that period.
And despite this week’s massive losses, the Dow is still nearly 20% higher than a year ago — around the time of Donald Trump’s inauguration — and the broader S&P index almost 13%.
Volatility in world markets remained rampant yesterday.
A key trigger of the stocks pullback was a strong US jobs report a week ago that also showed rising US wage growth, fuelling speculation the Federal Reserve will lift rates more than the three times already forecast this year.
At the same time, the European Central Bank is on the verge of ending its crisis-era stimulus, while the Bank of England warned Thursday that its main interest rates could rise faster-than-expected in 2018.
The dollar gained ground against its peers in late European trading as the greenback stands to gain from a tighter US monetary policy.
A visitor passes a sign as he enters the London Stock Exchange Group offices in Paternoster Square. London’s FTSE 100 closed 1.3% down at 7,077.94 points yesterday.
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