(MENAFN- Khaleej Times) World stock markets sank on Thursday, extending losses from Wall Street, as investors worried that higher interest rates will dent company earnings and a trade war will crimp global business.
European stocks slumped to a 21-month low after Wall Street's worst losses in eight months triggered a surge of global selling that also hit Asia and emerging markets.
Losses in London, Paris and Milan were at nearly 2 per cent ahead of what looked set to be another early dive from Wall Street, although it wasn't quite as dramatic as the overnight session in Asia.
MSCI's broadest index of Asian shares not including Japan ended down 3.6 per cent, having struck its lowest level since March 2017. China's main indexes had slumped over 5 per cent.
It meant MSCI's 24-country emerging market index was having its worst day since early-2016, after Wall Street's swoon had given the 47-country world index equivalent its worst day since February.
"Equity markets are locked in a sharp sell-off, with concern around how far yields will rise, warnings from the IMF about financial stability risks and continued trade tension all driving uncertainty," summed up analysts at ANZ.
The sell-off, which came as the head of the International Monetary Fund, Christine Lagarde, said stock market valuations have been "extremely high", erased hundreds of billions of dollars of global wealth.
The benchmark S & P 500 index dipped 15 points, or 0.6 per cent, to 2,770 at 10:50am after it fell 3.3 per cent on Wednesday, and the Dow Jones Industrial Average lost 138 points, or 0.5 per cent, to 25,4460 after an 831-point plunge. Technology and Internet companies recovered slightly after big losses over the past week, but energy companies fell along with oil prices.
The Nasdaq composite fell 24 points, or 0.3 per cent, to 7,398after a 4.1 per cent dive that was its biggest one-day loss in two years. The Russell 2000 index of smaller-company stocks was slightly higher at 1,579. Most of the companies on the New York Stock Exchange traded lower.
France's CAC 40 dropped 1 per cent and the DAX in Germany lost 0.6 per cent. Britain's FTSE 100 sank 1.3 per cent. In Asia, Tokyo's Nikkei 225 gave up 3.9 per cent and Hong Kong's Hang Seng index shed 3.5 per cent. The Kospi in South Korea fell 4.4 per cent.
India's key stock indices slumped, settling over 2 per cent lower. The NSE Nifty50 provisionally closed at 10,234.65, down 225.45 points or 2.16 per cent. The benchmark S & P BSE Sensex, which had opened at 34,063.82 points, settled at 34,001.15 points, down 759.74 points or 2.19 per cent. The Sensex touched an intra-day high of 34,325.18 and a low of 33,723.53.
Sinking global shares had raised the stakes for US inflation figures which ended up coming in relatively tame. High inflation would only stoke speculation of more aggressive rate hikes from the Federal Reserve - one of the things that has spooked markets.
On Wall Street, the S & P500's sharpest one-day fall since February on Tuesday had wiped out around $850 billion as the S & P toppled over 3 per cent and the Nasdaq's high-flying tech shares tumbled even more on fears of slowing demand.
The bloodletting attracted the attention of US President Donald Trump, who pointed an accusing finger at the Fed for raising interest rates.
"I really disagree with what the Fed is doing," Trump told reporters before a political rally in Pennsylvania. "I think the Fed has gone crazy."
Middle Eastern stock markets also fell sharply, led by Saudi Arabia, where the index plunged 3.9 per cent in its biggest drop since January 2016 as weakness in global bourses and a pull-back in oil prices alarmed investors.
The Saudi index's slide in heavy trade saw big falls by some of the top blue chips favoured by foreign investors. Petrochemical producer Saudi Basic Industries tumbled 5.1 per cent and Al Rajhi Bank sank 4.4 per cent.
"The market decline was expected, given the sell-off seen in international markets, led by the US. All major markets have witnessed the brunt of this selling pressure, as investors seem to be closing their positions," said Faisal Hasan, chief business development officer at Kuwait's Kamco Investment.
In Egypt, the blue-chip index fell 2.5 per cent. In addition to global equity weakness, an online newspaper quoted the deputy finance minister as revealing foreign holdings of Egyptian Treasuries had declined nearly 20 per cent from the end of June. Such outflows could weaken the currency.
In Dubai, the index fell 2 per cent, dragged down by banks and real estate shares. Dubai Islamic Bank lost 1.9 per cent to Dh5.25 despite reporting a 10.8 per cent rise in third-quarter profit on Wednesday.
Abu Dhabi's index dropped 0.9 per cent to 4,968 points. Kuwait shed 0.6 per cent to 5,257 points, Bahrain dropped 0.4 per cent to 1,316 points, while Oman fell 0.4 per cent to 4,490 points.
The euro was at $1.1550, up from a low of $1.1429 early in the week. The dollar lapsed to 112.17, a retreat from last week's 114.54 peak.
That left the dollar at 95.263 against a basket of currencies.
In commodity markets, gold struggled to get any safety bid and edged down to $1,192.77.
MENAFN1410201800490000ID1097565616
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.