Wall Street’s worst day since mid-2020
Author of the article:
Bloomberg News
Srinivasan Sivabalan and Robert Brand
The S&P 500 posted the biggest single-day drop since June 2020 on Wednesday amid growing concern that high inflation is cutting into corporate performance. Photo by Hannelore Foerster/Bloomberg News A global stocks rout deepened on Thursday, with European shares tumbling and American index futures signalling more losses ahead after yesterday’s selloff that erased US$1.5 trillion of market value from U.S. equities.
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Futures on the S&P 500 Index slid 1.4 per cent after the equity benchmark posted the biggest single-day drop since June 2020 on Wednesday amid growing concern that high inflation is cutting into corporate performance. Nasdaq 100 contracts were down more than 1.5 per cent as a global selloff of technology stocks gathered momentum. The Stoxx 600 retreated 2 per cent, with all industry sectors in the red and personal care and financial services leading the decline.
Treasury yields dropped about five basis points as investors turned to havens. Most European bonds also gained, with the yield on German 10-year securities falling almost seven basis points. The dollar weakened against a basket of peers.
Bets that robust earnings can help investors weather this year’s turbulence were thrown in doubt after U.S. consumer titans signalled growing impact of high inflation on margins and consumer spending. Meanwhile, Federal Reserve officials reaffirmed that tighter monetary policy lies ahead, and investors fretted over stagflation risks.
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“We are pricing in a growth scare,” Lori Calvasina, the head of U.S. equity strategy at RBC Capital Markets, told Bloomberg TV. “There is a lot of uncertainty in this market right now about whether or not that recession is going to come through or if it’s going to be another near-death experience.”
Stocks of retailers and consumer-discretionary companies posted some of the biggest losses in Asia and Europe after U.S. investors questioned the lofty valuations of companies like Target Corp. against the backdrop of rising interest rates.
In China, Tencent Holdings Ltd. plunged 6.6 per cent after warning it will take time for Beijing to act on promises to prop up the Chinese tech sector. Cisco Systems Inc. slid in extended U.S. trading on a disappointing revenue outlook.
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On the commodities front, Brent crude was steady after a two-day drop, while most industrial metals declined as global growth fears damped the demand outlook. Copper held near a seven-month low and zinc extended losses.
Elsewhere, the Swiss franc extended its advance versus the euro, after gaining as much as 1.5 per cent against the common currency Wednesday after Swiss National Bank President Thomas Jordan said policy makers are ready to act against inflation.
Some of the main moves in markets:
Stocks The Stoxx Europe 600 fell 2 per cent as of 10:12 a.m. London time Futures on the S&P 500 fell 1.5 per cent Futures on the Nasdaq 100 fell 1.7 per cent Futures on the Dow Jones Industrial Average fell 1.4 per cent The MSCI Asia Pacific Index fell 1.8 per cent The MSCI Emerging Markets Index fell 2.1 per cent Bonds The yield on 10-year Treasuries declined five basis points to 2.83 per cent Germany’s 10-year yield declined seven basis points to 0.96 per cent Britain’s 10-year yield declined five basis points to 1.82 per cent Commodities Brent crude fell 0.7 per cent to US$108.34 a barrel Spot gold rose 0.5 per cent to US$1,825.90 an ounce Bloomberg.com
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