Tue, 23 Oct 2018
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Bloodbath on stock markets may be over, for now

By Jay Jackson, Trinidad News
12 Oct 2018, 13:24 GMT+10

NEW YORK, New York - It was a bloodbath on global stock markets on Thursday, following on from Wednesday's rout.

The Dow Jones on Thursday, which had lost more than 800 points on Wednesday, shed another 545.91 points or 2.13% to close a fraction above the 25,000 handle at 25,052.83.

The Dow is now down 1,900 points, around 7%, after hitting a record high of 26,951 on October 3rd.

The Standard and Poor's 500 lost 57.31 points or 2.06% on Thursday to close at 2,728.37.

Gold rose 2% on Thursday, however the U.S. dollar weakened.

U.S. stock futures spiked up 0.6% in early Asian trading on Friday. The U.S. Treasury Department indicated it would not call China a currency manipulator in its upcoming report, which was considered positive given that much of the volatility in stocks has coincided with moves on the China-U.S. trade tariffs front.

Another concern for investors has been U.S. interest rates which have been on the rise, much to the chagrin of President Donald Trump.

“Folks are re-rating whether the Fed is going to tighten too much, I think that’s the fear,” Michael Arone, chief investment strategist at State Street Global Advisors in Boston told Bloomberg. "Even so, nothing’s really changed in terms of the Fed’s path, and I think the economy continues to be quite strong,” Arone said.

Investors “have had a violent overreaction,” he added.

The sudden, and explosive fall in stocks since reaching record highs only last week has caught most by surprise, but not all.

“The U.S. share market is now about 7% off of its 100-day high, but this is far from a rare occurrence historically. Indeed, history is littered with over 5%-ish type selloffs in the midst of economic expansions,” economists at RBC Capital Markets were quoted by Reuters Thomson as saying in a report.

Technology stocks, which bore the brunt of the plunge on Wednesday, were less out-of-favour on Thursday. The benchmark Nasdaq Composite index was down 92.99 points or 1.25% at 7,329.06. The index had fallen more than 4% on Wednesday.

China on Friday was scheduled to release its latest trade balance numbers. The country's overall trade surplus for September is expected to decline to $19.40 billion, compared to the previous month's reading of $27.89 billion.

 

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