A wave of selling gripped global markets yesterday as the rout in all but the safest assets deepened.
Wall Street opened sharply lower with the Dow Jones industrial average losing more than a 1,000 points. The Dow has never lost more than 800 points in a day.
Futures on the NASDAQ, S&P and Dow indices were halted briefly before the market opened after hitting a circuit breaker, a step taken by exchanges to reduce volatility and give investors time to assess information.
Photo: EPA
With yesterday’s selloff, the S&P 500 Index and the NASDAQ composite slipped into correction mode, joining the Dow, which slid into correction territory on Friday last week.
An index is considered to be in correction when it falls 10 percent from its 52-week high.
The New York Stock Exchange invoked a rule saying market makers do not have to disseminate price indications before the opening bell in an effort to make it easier and faster to open stocks on a volatile trading day.
Earlier in the day, Chinese shares tumbled by the most since 2007, while stocks in Germany headed for a bear market and commodities fell to a 16-year low.
Russia’s ruble led a selloff in emerging-market currencies, while the yen strengthened and 10-year US Treasury yields slid below 2 percent for the first time since April.
Futures signaled the selloff in the US would continue as the NASDAQ 100 contract fell by its 5 percent daily limit where further declines are barred.
“Everyone seems to be selling off, and there’s panic,” said Michael Woischneck, who helps oversee the equivalent of US$7.1 billion at Lampe Asset Management GmbH in Dusseldorf, Germany. “There’s no rational choice anymore, no rational reaction. The Americans will add to the European selling.”
More than US$5 trillion has been erased from the value of global equities since China unexpectedly devalued the yuan on Aug. 11, fueling concern that the slowdown in the world’s second-largest economy is worse than anticipated.
The rout is shaking confidence that the global economy will be strong enough to withstand higher US interest rates, even as bets ease on an increase next month.
Trading volume was more than double the 30-day average in Europe, where stocks headed for the biggest drop since 2008.
The MSCI Emerging Markets Index slid 5 percent at 8:53am in New York, the most since 2011.
Producers of basic resources led losses as Brent crude tumbled through US$45 a barrel. Treasury 10-year note yields fell as low as 1.97 percent.
“We’re definitely getting a lot of calls from clients,” Michele Santangelo, a money manager at Vunani Private Clients, said by telephone from Johannesburg, South Africa. “You’re seeing a lot of capitulation, people selling for the sake of selling and wanting to get out of the market.”
Shares in all but three companies fell in the STOXX Europe 600 Index, driving the gauge down 5 percent. Germany’s DAX retreated 4.5 percent, taking the decline from its peak in April to more than 20 percent.
Investors are selling their most-loved stocks, with Apple Inc and Netflix Inc losing more than 4 percent in early New York trading.
The selloff will worsen, according to Doug Ramsey, the chief investment officer of Leuthold Weeden Capital Management LLC, whose quantitative research into market breadth, valuation and investor sentiment foreshadowed the drubbing in US stocks last week.
In Asia, the Shanghai Composite Index slid 8.5 percent and Hong Kong’s Hang Seng Index fell 5.8 percent, tumbling further into a bear market. The measure is about 25 percent below an April high, with a gauge of price momentum dropping to the lowest since the October 1987 stock-market crash.
“This is a real disaster and it seems nothing can stop it,” said Chen Gang (陳剛), Shanghai-based chief investment officer at Heqitongyi Asset Management Co.
Greater China equities plummeted, with Taiwan’s TAIEX dropping as much as 7.5 percent. More than US$4 trillion was wiped from the value of Chinese equities from June 12 through Friday last week.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique