Upshot after brutal Wall Street week; EU, Asia plummet
WALL Street stocks ended a bruising week on a benign note courtesy of a late-session surge on Friday, while equity markets in Europe and Asia fell sharply in volatile trading.
US stocks lurched back and forth in a rollercoaster session, opening decisively higher, then tumbling deep into the red at midday before rising again and finishing strong.
Europe’s key markets extended the recent days’ downturn to show substantial losses at the close following another spectacular drop in Asian shares.
“How long can the selloff last? That is the million – if not billion – dollar question,” Fawad Razaqzada at Forex. com said, adding that the absence of massive buyers at current low price levels was a worry.
“We had plenty of volatility today and we’ll see more next week,” said Art Hogan, chief market strategist at Wunderlich Securities.
“You have to go back to the financial crisis days to see this kind of volatility.”
The market’s best hope for escaping the current cycle is if this week’s US inflation data contain no bombshells and bond yields do not increase from their current range, Hogan said.
The Dow Jones Industrial Average ended up 1.4 percent at 24,190.90 after swinging more than 1,000 points during the session.
In spite of the robust finish, the Dow’s weekly losses were the worst since January 2016 and investors are bracing for more turbulence ahead.
“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,” Razaqzada said.
Paris, London and Frankfurt all lost more than 1 percent.
Asian trading floors were a sea of red, with concerns about tighter interest rates, particularly in the United States.
Hong Kong, Shanghai and Tokyo were among the worst hit as investors piled into haven assets such as gold and the yen.
Oil prices also tumbled, with US benchmark West Texas Intermediate losing $1.95 to $59.20 per barrel to suffer its biggest weekly loss in two years.
Analysts attributed the drop to wor- ries about oversupply given strong US oil output and to a spillover in volatility from equity markets.