STOCKS PLUNGE IN XMAS ROUT
beijing — Japanese stocks plunged on Tuesday and other Asian markets declined following heavy Wall Street losses triggered by US President Donald Trump’s criticism of the US central bank.
The Nikkei 225 fell by an unusually wide margin of 5 per cent to 19,155.14 points. The Shanghai Composite Index ended off 0.9 per cent at 2,504.82 after being down as much as 2.3 per cent at midday. Benchmarks in Thailand and Taiwan also declined.
Markets in Europe, Hong Kong, Australia and South Korea were closed for Christmas.
In Gulf region, the Dubai index was the sole gainer of the session, inching up on the back of rises in its banking shares, with most major Gulf bourses slipping on tepid global sentiment and weak oil prices.
The Saudi index was down 0.6 per cent, with Al Rajhi Bank falling 1.6 per cent, Saudi Basic Industries Corp losing 1.5 per cent and Saudi Arabian Mining Co shedding 2.3 per cent. The Dubai index rose 0.3 per cent to 2,467.35 after hitting a fiveyear low on Monday.
The Egyptian blue-chip index fell 0.9 per cent, Qatar’s market declined 1.3 per cent, Abu Dhabi’s main index slid
Investors have no confidence in the US administration. Markets are driven by perception and it is flat-out bad
Stephen Innes, Head of trading for Asia-Pacific at Oanda
What’s happening in the stock market is raising fears that the economy is grinding to a halt
Phil Flynn, Analyst at Price Futures Group in Chicago
There are no signs of selling running its course or big buyers emerging
Makoto Sengoku, market analyst at Tokai Tokyo Research Institute
0.35 per cent and Kuwait’s index lost 0.6 per cent to 5,273 points. US markets tumble
Wall Street indexes fell more than 2 per cent on Monday after Trump said on Twitter the Federal Reserve was the US economy’s “only problem.” Efforts by Treasury Secretary Steven Mnuchin to calm investor fears only seemed to make matters worse.
The Standard & Poor’s 500 index slid 2.7 per cent. The benchmark index is down 19.8 per cent from its peak on September 20, close to the 20 per cent drop that would officially mean the end of the longest bull market for stocks in modern history — a run of nearly 10 years.
The Dow Jones Industrial Average sank 2.9 per cent while the Nasdaq skidded 2.2 per cent.
In currency trading, the dollar declined to 110.28 yen from Monday’s 110.45 yen. The euro was little-changed at $1.1407. Trump’s spat
Stephen Innes, head of APAC trading at Oanda, said Trump’s spat with the Fed and Mnuchin’s call with the banks had “markets running for cover.”
Investors “have no confidence in the administration. Markets are driven by perception and it is flatout bad,” he said.
US stocks are track for their worst December since 1931 during the Great Depression. Shanghai is down almost 25 per cent this year. Tokyo, Hong Kong and other markets are on track to end 2018 down more than 10 per cent.
Markets have been roiled by concerns about a slowing global economy, the US-Chinese tariff battle and another interest rate increase by the Fed.
I can’t tell you where the bottom will be as there are various risks,” said Makoto Sengoku, a market analyst at Tokai Tokyo Research Institute.
“There are no signs of selling running its course or big buyers emerging,” he said.
For Justin Tang, the head of Asian research at United First Partners in Singapore, 20,000-point is an important support level, which, if breached, confirms downside momentum in Japan market.
“This will be the last bastion of hope for Japanese investors,” Tang said. Oil plunges
Oil prices plunged more than six per cent to the lowest level in more than a year on Monday, pulling back sharply late in the session as fears of an economic slowdown rattled the market.
US crude futures and global benchmark Brent hit their lowest levels since 2017 during the session, putting both benchmarks on track for losses of about 40 per cent in the fourth quarter.
“What’s happening in the stock market is raising fears that the economy is grinding to a halt and thereby will basically kill any future oil demand,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “They’re pricing in a slowdown in the economy if not a recession with this drop.”
The fourth-quarter price decline is likely to cause producers to throttle back on their output, he said.
US crude futures settled at $42.53 a barrel, down $3.06, or 6.7 per cent. Brent crude futures settled down $3.35, or 6.2 per cent, at $50.47 a barrel.
US crude futures have hit the lowest level since June 22, 2017, as jitters have grown about the impact of the escalating US-China trade dispute on global growth and crude demand. Brent crude is at its lowest level since August 17, 2017.