Europe stock markets tumble on global economic growth fears

Stock markets went back into selloff mode yesterday as fears over the world’s economic outlook undermined any lingering investor hopes of finishing 2018 with gains.
European equities ignored the previous day’s bumper gains on Wall Street, with Frankfurt shedding a whopping 2.4% to 10,381.51 at the close, having plunged by more than 3% at one point during the afternoon.
The New York market itself clearly lacked confidence in the sustainability of Wednesday’s roar back to life, when the Dow Jones index managed its biggest ever points gain.
Approaching midday in New York yesterday, the Dow was down again by over 1%, making Wednesday’s surge look like a “dead cat bounce” – market parlance for a brief interruption of a downward trend.
“US stocks are sinking,” analysts at Charles Schwab noted drily.
They were, however, off their morning lows, offering a glimpse of hope that a recovery was possible by the Wall Street close.
Mirabaud Securities Geneve experts said Wednesday’s surge now looked “more and more like a bear market rebound, in other words technical and not destined to last”.
Investors usually define a “bear market” as a stock index suffering a decline of 20% or more from its recent peaks.
At current levels, Wall Street’s DJIA index and the S&P 500 are both looking at losses this year of over eight percent and the Nasdaq at more than 6%.
In Europe, Frankfurt is now nearly 20% down from the start of the year, London over 14% and Paris more than 13%.
Global investors have been unnerved by a variety of factors, including the partial US government shutdown and US President Donald Trump’s ongoing criticism of Fed Chair Jerome Powell.
Other negative factors include risks of a no-deal Brexit when Britain leaves the European Union in March 2019 – and the ongoing trade war between China and the United States.
“The rally which we experienced over on Wall Street on Wednesday has hit the wall,” Thinkmarkets analyst Naeem Aslam told AFP.
“Investors are busy profit-taking. Basically, we are struggling for the momentum to continue.”
New York stocks had hurtled higher in post-Christmas trade on Wednesday, following strong data and White House reassurances that Powell would remain in his post.
Sentiment also improved after a Bloomberg News report said a US government delegation would travel to Beijing in early January to hold trade talks, the first face-to-face discussion since US President Donald Trump and Chinese President Xi Jinping agreed on a 90-day trade war truce.