Business World

Tuesday 19 June 2018

US stocks swing back into positive territory as wild volatility grips global markets

  • US stocks push back into positive territory but markets fluctuate wildly
  • FTSE 100 plunges as much as 3.5pc on opening before clawing back lost ground
  • The FTSE 100 closed lower by 2.6% or 193.58 points to end the day at 7,141.4 points, as the global stock market sell-off continues.
  • European shares fall to six-month low
  • Follows steepest declines on Wall Street since 2011
  • Euro STOXX volatility set for biggest one-day gain since 2001
Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange (NYSE)

Ben Woods

US stock markets bounced after a torrid opening on Tuesday, bargain-hunters and gains for Apple pushing the tech-heavy Nasdaq and the Dow Jones Industrial Average into positive territory after two days of heavy losses.

Both the S&P 500 and the Dow sank more than 4pc on Monday, their biggest falls since August 2011, as concerns over rising U.S. interest rates and government bond yields hit record-high valuations of stocks.

New York's three main indexes sank as much as 2pc on the opening bell but they quickly moved back into positive territory.

An almost 2pc gain for Apple was at the heart of an almost half percent gain for the Nasdaq Composite.

"Daily drops of 3pc or more have been buying opportunities for the S&P 500 post financial crisis," said Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets.

At 9:49 a.m. ET (1449 GMT), the Dow Jones Industrial Average gained 0.25pc to 24,406.14. The S&P 500 rose 0.2pc to 2,654.25 and the Nasdaq 0.4pc to 6,993.47.

A view of the Stocks app on an iPhone against the London Stock Exchange sign in the City of London Credit: Kirsty O'Connor/PA Wire
A view of the Stocks app on an iPhone against the London Stock Exchange sign in the City of London Credit: Kirsty O'Connor/PA Wire

London's top-flight index joined global markets this morning by crashing into the red over fears that rising inflation could force central banks to hike interest rates.

The FTSE 100 Index sank by more than 2.5pc - hitting its lowest level since late 2016 at 7,079.41 - before paring losses to fall 163.57 points to 7,167.08.

The FTSE 100 closed lower by 2.6% or 193.58 points to end the day at 7,141.4 points, as the global stock market sell-off continues.

Across Europe, Germany's Dax plummeted by 2.7pc and the Cac 40 in France was languishing 2.1pc lower.

Falls in Europe followed a brutal overnight sell-off in Asia and on Wall Street, where the Dow Jones Industrial Average and the S&P 500 dropped 4.6pc and 4.1pc respectively.

Tokyo's Nikkei 225 Day closed down 4.7pc, while the Hong Kong's Hang Seng Index plunged 5pc lower.

A screen showing the prices on the London Stock Exchange turns red as the FTSE 100 Index crashed on opening by more than 230 points to 7,104.94 as inflation fears continue to rock global markets Credit: PA Wire
A screen showing the prices on the London Stock Exchange turns red as the FTSE 100 Index crashed on opening by more than 230 points to 7,104.94 as inflation fears continue to rock global markets Credit: PA Wire

The global equity sell-off has been building since last Friday when traders became spooked by the prospect of tighter monetary policy after the US posted strong average earnings data.

The crash follows deep losses during Monday's session when more than £27bn was wiped off the value of London's blue-chip stocks.

Connor Campbell, financial analyst at Spreadex, said: "The only hope for the markets at the moment is that investors suddenly decide that the sell-off has been a bit overdone - though in a way it is fitting, matching the astonishing, record-breaking recent rise of the global indices with an equally astounding, heart-stopping drop.

"Admittedly the Bank of England could go some way to allaying investors' fears of rising interest rates on Thursday, if (governor) Mark Carney issues a more dovish statement than forecast."

Rangold Resources was one of few rising stocks among the sea of red, as a move towards safe havens sent the precious metal miner surging 11pc higher.

The Scottish Mortgage Investment Trust emerged as the biggest victim of the sell-off dropping 5.5pc, but was closely followed by Ashtead Group and Evraz, which plummeted 3.7pc and 2.9pc respectively.

Away from the top tier, the FTSE 250 Index was also suffering, dropping more than 2pc or 413.41 points to 19,279.74.

Jasper Lawler, head of research at London Capital Group, said there were "a lot of wide-eyed looks" on the trading floors.

He said: "The bloodbath on Wall Street has washed away all the confidence in European markets. The indiscriminate selling will probably continue until Wall Street finds its first bottom.

"The FTSE 100 was off its lows of the day half an hour into the trading session, down around 150 points from yesterday's close.

"For what it's worth, sentiment has improved from overnight pricing which at one point pointed to a 350-point opening loss for the FTSE 100."

On the currency markets, the pound was 0.1pc higher at 1.398 against the US dollar and was 0.2pc lower versus the euro at 1.126.

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