Stock markets slump around the globe

(MENAFN- AFP)Stock markets around the world slumped Monday on intensifying worries over the prospect of rising interest rates in the United States, dealers said.

Wall Street, which kicked off the global selloff on Friday as a bright non-farm payrolls report sent Treasury bond yields soaring on fears of a quicker-than-anticipated increase in borrowing costs, fell again at start of trading on Monday.

The Dow Jones Industrial Average shed 1.1 percent in the first minute of trading, having tumbled 2.5 percent on Friday after the release of a healthy January jobs report that showed the biggest increase in wages in nine years. That catapulted 10-year Treasury yields -- a key global interest rates indicator -- to fresh four-year highs.

That turmoil claimed fresh losses in Asia and Europe on Monday, with traders fretting that a resurgent US economy will lead to rapid interest rate rises by the Federal Reserve.

The selling was fuelled also by profit-taking after a blistering January that saw several indexes strike record or multi-year highs, while energy firms were hit by a drop in oil prices.

- Bull run at end? -

"Stocks look like they are set for a correction of some sorts after huge losses over the last few sessions that has left many bulls worried that the bull run may have come to an end," said AxiTrader analyst James Hughes.

On Friday, New York's Dow closed down 666 points, with the S & P and Nasdaq also down sharply.

"This morning Europe is catching the virus and is aggressively lower," said Hughes.

"The issue with this kind of fall is that it becomes a snowball effect, and after such astronomical gains since election day 2016 the falls can be equally as aggressive, but nobody could say that a correction has not been due."

A market correction is drop of more than 10 percent from recent highs. At the end of trading on Friday the Dow stood down 4.1 percent from a record high struck on January 26.

Wall Street has enjoyed a record-breaking run ever since Trump's 2016 election on hopes of a beneficial impact from the US president's pro-business tax-cutting policies.

But many equity markets were already in negative territory last week owing to rising bond yields and profit-taking.

In Asia on Monday, Tokyo dived 2.6 percent, while Hong Kong sank more than one percent and Sydney closed down 1.6 percent. However, Shanghai recovered to end 0.7 percent higher.

In Europe, London shed 1.3 percent and Paris 1.4 percent in afternoon trading. Frankfurt gave up 0.8 percent.

- 'Equity storm' -

The rise in bond yields, fuelled by a surging US economy and corporate earnings, has spooked traders, worried that the Fed will raise borrowing costs more than the three times initially expected this year.

"It's an equity storm, created by the pressure from bonds," noted ETX Capital analyst Neil Wilson.

"Equity nervousness seems to be about repricing for higher yields and tighter Fed policy."

- Key figures around 1430 GMT -

London - FTSE 100: DOWN 1.3 percent at 7,350.31 points

Frankfurt - DAX 30: DOWN 0.8 percent at 12,661.36

Paris - CAC 40: DOWN 1.4 percent at 5,290.56

EURO STOXX 50: DOWN 1.2 percent at 3,480.45

New York - DOW: DOWN 1.1 percent at 25,249.36

Tokyo - Nikkei 225: DOWN 2.6 percent at 22,682.08 (close)

Hong Kong - Hang Seng: DOWN 1.1 percent at 32,245.22 (close)

Shanghai - Composite: UP 0.7 percent at 3,487.50 (close)

Euro/dollar: DOWN at $1.2415 from $1.2453 at 2200 GMT

Pound/dollar: DOWN at $1.4024 from $1.4116

Dollar/yen: DOWN at 109.80 yen from 110.18 yen

Oil - Brent North Sea: DOWN 64 cents at $67.94 per barrel

Oil - West Texas Intermediate: DOWN 37 cents at $65.08

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