Global market sell-off as fears of aggressive Fed tightening rise

REUTERS/Kim
Kyung-Hoon

• Stock markets around the world sell off sharply as
  fears about slowing economic growth and rising interest rates
  spook investors.
• The sell-off began on Wall Street on Wednesday with the
  Dow Jones witnessing its third largest one-day point drop in
  history.
• Bloodbath then spread to Asia with China’s most
  significant mainland index, the Shanghai Composite, losing more
  than 5%.
• Europe is now suffering, with virtually all major
  bourses down more than 1.2% in the first hour of
  trading.

Stock markets around the world are taking a hammering on Thursday
as rising fears about global economic growth and
ongoing trade tensions continue to rattle investor
confidence.

The sell-off started in the US on Wednesday, with
the Dow Jones seeing a more than 800 point drop during the
session, its third biggest single-day point fall in history.

Things then spread to Asia overnight, with all major indices
on the continent witnessing major drops. 

“Equity markets are locked in a sharp sell-off, with
concern around how far yields will rise, warnings from the IMF
about financial stability risks, and continued trade tension all
driving uncertainty,” analysts at ANZ Bank wrote on
Thursday.

Concerns in Asia are exacerbated by investor doubts that
fresh stimulus from China’s central bank will help prevent US
President Trump’s trade war from triggering an economic slowdown.
Warnings about global growth from the IMF, along with rising
interest rates, contributed to the concerns. Trump yesterday
weighed in on the selloff to blame the Fed, calling its interest
rate policy “crazy.”

• CHINA: The Shanghai Composite was
  down 5.2%.
• EUROPE: By about 8.25 a.m. BST (3.25
  a.m. ET) Asia’s bloodbath session had spread into Europe, with
  virtually all major European indices losing more than 1% of
  their value in early trade.
• UK: Britain’s blue-chip FTSE 100, for
  example, has lost 1.22% to trade at 7,058 points, while Italy’s
  FTSE MIB index is now just a whisker away from entering a bear
  market, down 1.16% at 19,489.

“A crazy day in the markets yesterday looks set to continue
with further selling expected in equities today,” Neil Wilson,
chief analyst at Markets.com said in an email Thursday
morning. 
“Clearly we’ve entered a severe bout
of selling that may well have further to go.”

China’s most significant mainland index, the Shanghai Composite,
dropped more than 5% during Thursday’s trading session,
the second time in just four days it has lost 4% or more of its
value. Elsewhere in Asia, Hong Kong’s Hang Seng lost 3.3%,
while Japan’s benchmark Nikkei 225 was down just shy of
4%.

While the market is clearly gripped by fear right now, US
Treasury Secretary Steven Mnuchin urged calm. 

“Markets are not efficient and markets move in both
directions and at times they overshoot in both directions,” he
told reporters on the sidelines of the IMF’s annual meeting in
Bali, Indonesia.