Alarm sets off global stocks slide
Huawei official’s arrest adds to the worries investors already have over trade wars and oil price volatility
The S&P 500 and the Dow Jones Industrial Average slipped back to losses for the year yesterday, as US stocks fell on mounting worries of slowing global growth after a fresh twist in China-US tensions as well as lower oil prices and US bond yields.
All the 11 major S&P sectors were in the red. Technology fell 0.90 per cent, energy 3.27 per cent and the trade-sensitive industrials 2.07 per cent.
The biggest drag came from a 2.90-per cent slump in financials as bond yields fell and bets of a rate hike were pushed lower.
At 1:02pm ET, the Dow was down 450.24 points, or 1.80 per cent, at 24,576.83, the S&P 500 was down 39.13 points, or 1.45 per cent, at 2,660.93 and the Nasdaq Composite was down 40.15 points, or 0.56 per cent, at 7,118.28.
The arrest of Chinese smartphone maker Huawei Technologies Co Ltd’s chief financial officer at the request of the US cast fresh doubts over the prospect of Beijing and Washington striking a deal on trade tariffs in their 90-day truce period.
“Markets are extremely sensitive to any news regarding trade. The potential slowdown in global growth is also something the markets are pricing in,” said Massud Ghaussy, senior analyst at Nasdaq IR Intelligence in New York.
The Dow and the S&P were down more than 1.5 per cent, tracking 0.4 per cent losses for the year despite coming well off their session lows.
Optimism fades
Optimism after the trade truce over the weekend boosted Wall Street on Monday, extending a rally from last week when the Federal Reserve signalled a slower pace of rate hikes.
But that optimism faded on Tuesday and, along with a drop in longer-dated U.S Treasury yields, triggered a slide in equities ■ ■ Indian equities tumbled as investors remained risk averse ahead of the outcome of key state elections that may set the tone ahead of the national ballot in 2019. The S&P BSE Sensex slid 1.6 per cent, the biggest drop since October 11, to 35,312.13, while a gauge of mid-cap stocks — a barometer of retail investor interest — ended at its lowest level in more than a month.
UK’s stock investors can wave goodbye to index gains of the last 18 years. The FTSE 100 on Wednesday closed below the level seen at the end of 1999, and extended its declines yesterday. The benchmark gauge fell as much as 2.9 per cent, the worst drop on a closing basis since June 24, 2016, the day after the Brexit referendum. The renewed sell-off in global equities is piling additional pressure on UK stocks, already rocked by concerns about UK Prime Minister Theresa May’s ability to get her Brexit deal through Parliament. that continued yesterday. Markets were closed on Wednesday.
The benchmark 10-year Treasury yield held at threemonth lows as traders bet on fewer rate hikes after data showed US trade deficit hit a 10-year high in October and that the pace of job growth was moderating.
“We have a repricing of risk as shown in rising bonds (prices), but is obviously adding to the negativity in equities,” said Ghaussy.
The CBOE Volatility Index, the most widely followed barometer of expected near-term volatility for the S&P, jumped to its highest since October 29. Declining issues outnumbered advancers for a 3.38-to-1 ratio on the NYSE and a 2.20-to-1 ratio on the Nasdaq. ■