World markets dive as investor panic spreads

LONDON: Panic gripped trading floors across the world on Tuesday, with Asia and Europe plunging after recordbreaking losses on Wall Street, as investors fretted over the prospect of following months of markets euphoria.

The selloff began last Friday, when bright US non-farm payrolls data sparked and that the US Federal Reserve would be forced to raise borrowing costs more quickly than anticipated.

In opening trade on Tuesday, European stock markets collapsed by about 3.5 percent, mirroring dramatic falls across Asia.

“It’s not doom and gloom, and it’s just a much needed and much overdue correction,” AxiTrader analyst James Hughes told Agence France-Presse.

“There are four stages of a fall: hope, greed, panic and fear. We are not at fear, but we are at panic at the moment, which is only natural after a 1,175-point fall,” he said.

New York’s Dow Jones Industrial Average saw its steepest ever one-day point drop on Monday, shedding 1,175.20 points, or a hefty 4.6 percent in value.

And 10-year US Treasury yields are still hovering at four-year peaks.

European markets later trimmed their gains on Tuesday to stand about 1.5 percent lower, compared with Monday’s closing level.

Revenge time

“Markets usually grind to the upside, but fall like a rock,” said analyst Naeem

“Traders have been looking at the market for the past year, moving in one direction, which was skewed to the

A man sweeps the floor after the closing bell of the Dow Industrial Average at the New York Stock Exchange on Monday ( Tuesday in Manila). upside. Now, it’s time for the bears to take their revenge,” he added.

Prior to this week’s chaotic selloff, Wall Street had enjoyed an impressive recordbreaking run ever since US President Donald Trump’s 2016 election on hopes over his pro-business tax-cutting policies.

Asia and Europe had, meanwhile, reaped bumper gains from the improving economic outlook.

“If investors had been waiting for an tightening by the Fed provided just that,” said Richard Hunter, head of markets at online stockbroker Interactive Investor.

“Rising interest rates, while potentially good news for savers, increase the cost of borrowing and the possibility of loan defaults,” he told AFP.

“Mixed in with that, higher bond yields could increase the attractiveness of bonds as an investment destination, some of which will be at the expense of equities,” Hunter said.

On Tuesday, Tokyo stocks led a almost 7 percent before closing at 4.7 percent.

Hong Kong lost more than 5 percent in its worst day since the summer of 2015, while Sydney and Singapore each sank 3 percent.

Other assets were also hammered, with lower oil prices slashing Asian energy firms, while higher- yielding safe havens.

On currency markets, the yen, considered a go- to unit in times of turmoil and uncertainty, climbed against the dollar.