Stocks head for worst losing streak in over half a decade
BEAR MARKETS HAVE INCREASED ACROSS INDEXES AND INDIVIDUAL STOCKS THIS YEAR
Global stocks slid lower yesterday and were set for their worst week in more than five years, as anxiety over corporate profits added to fears about global trade and economic growth.
European shares fell after Alphabet and Amazon’s earnings missed expectations, further sapping risk appetite as European earnings also disappointed.
The leading index of Eurozone stocks fell 1.5 per cent. Germany’s DAX was down 1.7 per cent and France’s CAC 40 down 1.8 per cent.
The MSCI All-Country World Index, which tracks shares in 47 countries, was down 0.3 per cent after trading began in Europe. It was set for its fifth straight week of losses, its worst losing streak since May 2013.
Wall Street was back in aggressive sell-off mode yesterday, with major stock indices losing more than two per cent following disappointing earnings announcements from Amazon and Google parent Alphabet.
Near 1510 GMT, the tech-rich Nasdaq Composite Index was down 3.1 per cent at 7,088.58.
The Dow Jones Industrial Average fell 1.8 per cent to 24,538.65 after earlier losing more than 2.0 per cent, while the broad-based S&P 500 shed 2.4 per cent to 2,639.52.
“Expectations for US company earnings are quite high, so whenever they are not being met, the reactions are quite severe,” said Miraji Othman, credit strategist at BayernLB.
“We have grown used to solid numbers, 18 per cent revenue growth, 25 per cent revenue growth and so on. The valuations have become quite ambitious.” S&P E-mini futures slumped 0.84 per cent, potentially setting up a rough session for US markets. ■
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.9 per cent, erasing gains made in the opening hour and hitting its lowest level since February 2017.
The Chinese yuan slid past a key level, refocusing attention on slowing growth in the world’s second-biggest economy.
The MSCI Asia index has been bruised by a sell-off in the past several days, and is on course for its fifth weekly loss — its longest losing streak since 2015. It has fallen more than 4 per cent this week.
Chinese shares were pulled lower and the yuan fell past 6.96 to the dollar, touching its weakest level against the dollar since December 2016.
The blue-chip index down 0.6 per cent and Shanghai Composite was per cent lower.
Australian shares ended flat. Japan’s Nikkei stock index closed 0.4 per cent lower, ending the week down 5.98 per cent.
Financial markets have been whipsawed in recent sessions amid concern over global growth created by Sino-US trade frictions, a mixed bag of US corporate earnings, Federal Reserve rate increases and an Italian budget dispute. was the 0.2
Bear markets — a price drop of 20 per cent or more from recent peaks — have increased across indexes and individual stocks since the start of this year. “The first, and most important (worry) is that Fed tightening and fading fiscal stimulus will cause the US economy to take a turn for the worse ... The second is that China’s economy will continue to struggle,” analysts at Capital Economics said in a note to clients. “As we have been arguing for a while now, these worries are likely to get worse over the next 12 months or so.”
In currency markets, the euro fell after European Central Bank President Mario Draghi said the bank’s €2.6-trillion asset purchase programme would end this year. The single currency was 0.1 per cent lower at $1.1365. The dollar was off 0.3 per cent against the yen at 112.04.