Stock Markets: US Shares Steadier After Wild Swings
Wall Street shares slipped on Wednesday, but were somewhat steadier than in recent days, which saw sharp trading swings.
The Dow Jones dipped less than 0.1 per cent, while the S&P 500 fell about 0.5 per cent and the Nasdaq dropped 0.9 per cent.
Declines in technology and energy shares weighed on the markets, which have seen a sudden increase in volatility.
Investors are worried by policy shifts, including higher interest rates.
European stock markets also recovered ground on Wednesday, but a rally in Asia faded.
Volatility
The volatility marks a turn for the markets, which rose steadily for much of last year.
But analysts and economists, who for months have forecast that rapidly-rising markets were due a correction, said investors should get used to choppier markets.
“It’s not like this is going to be one and done,” said JJ Kinahan, chief market strategist for TD Ameritrade.
Signs of volatility have been rising in recent weeks, as investors digest the impact of new tax cuts and tighter central banking policies, among other shifts.
A US Labor Department report of strong wage growth in January triggered a market sell-off last week, as investors saw a sign that inflation could rise faster than expected and lead the Federal Reserve to raise interest rates more quickly.
The market plunge spread globally as investors rushed to redistribute assets in reaction to the shift. Wednesday’s declines came after US lawmakers announced a budget deal, which would lift spending caps and could add to the inflationary pressures.
Soft demand for US Treasuries
Meanwhile, soft demand for US Treasuries at an auction on Wednesday sent yields higher - typically a signal of higher rates. London’s FTSE 100 closed 1.9 per cent higher, in Paris the Cac-40 rose by 1.8 per cent and Frankfurt’s Dax was up by 1.6 per cent.
In Asia, Japan’s Nikkei 225 index pulled back from early highs to add 0.2 per cent, while Hong Kong’s Hang Seng lost 0.8 per cent. Australia’s S&P/ASX 200 ended up 0.8 per cent while South Korea’s Kospi index dropped 2.3 per cent.