LONDON: Heavy selling pressure piled more pain on global stocks on Friday, putting them firmly on track for their worst weekly performance in years, as analysts wondered whether an overdue correction was rapidly turning into an equity market bloodbath.
Europe’s key markets extended the recent days’ downturn to show substantial losses at the close following another spectacular drop in Asian shares.
US stocks attempted a timid recovery in morning business on Wall Street, but then slumped, only to gyrate a few more times between negative and positive territory, leaving traders with few clues as to how New York’s trading day may end amid such staggering volatility.
Both the Dow and the S&P 500 indices are 10 per cent or more down from their recent peaks, placing them in what market players call “correction” territory: more than temporary weakness, but less than a “bear market” or possible crash.
“How long can the sell-off last? That is the million — if not billion — dollar question,” Fawad Razaqzada at Forex.com summed up market sentiment, saying that the absence of massive buyers at current low price levels was a worry.
“No one can say for sure, but things don’t look pretty out there given that the sharp falls haven’t been bought this time around. So, things could get ugly really quick,” he said.
Both the Dow and the S&P 500 are headed for their worst weekly decline since 2015, analysts said.
“That statistic just shows how complacent investors had become,” Manulife Asset Management analyst William Hamlyn told AFP.
In Europe, Frankfurt has also lost around 11pc from its summit levels, while London and Paris, each down around nine percent from recent peaks, have fared only slightly better.
But while key European markets now all stand several percent lower than they did three months ago, the Dow is still more than a percent up over that period.
And despite this week’s massive losses, the Dow is still nearly 20pc higher than a year ago – around the time of Donald Trump’s inauguration – and the broader S&P index almost 13pc.
Volatility in world markets remained rampant on Friday.
Asian trading floors were a sea of red Friday, with concerns about tighter interest rates, particularly in the United States.
Tokyo, Hong Kong and Shanghai were among the worst hit as investors piled into haven assets such as gold and the yen.
Emotional rollercoaster: “Investments over the coming weeks could be something of an emotional roller-coaster ride,” Rebecca O’Keeffe, head of investment at Interactive Investor, told AFP.
A key trigger of the stocks pullback was a strong US jobs report a week ago that also showed rising US wage growth, fuelling speculation the Federal Reserve will lift rates more than the three times already forecast this year.
At the same time, the European Central Bank is on the verge of ending its crisis-era stimulus, while the Bank of England warned on Thursday that its main interest rates could rise faster-than-expected in 2018.
Courtesy By : www.dawn.com