Wild Wall St Plummets Toward Correction
The Dow is inching closer to correction territory after another large (and surprising) 800 drop in the final half hour of trading. In fact the selling surged in the last 10 minutes, taking the loss flashing past the 1,000 point mark and the index into correction territory.
Trading on the overnight futures market has the ASX 200 facing a fall of around 100 plus points this morning, or more than 1.6% at the opening in the wake of this latest sell off on Wall Street.
In fact the Dow lost 200 points in around 10 minutes of trading, such was the selling wave which produced the second ever largest point fall in a day in a week. The loss of 1.033 points came after the 1,175 plunge at the start of this week.
Since its January 26 peak, the Dow has shed more than 2,500 points, putting close to correction territory for the second time this week. It had slipped into in the early moments of trade on Tuesday before a rebound lifted it away from danger.
A correction is defined as a decline of at least 10% from a recent peak. The Dow is now more than from its all-time high of 26,616.71 reached on January 26 after losing more than 4.1% overnight and closing at 23,860 points
The s&P 500 slumped as well, losing 3.75% or just over 100 points, to end at 2,581 points, while Nasdaq shed 3.9% or more than 274 points to end at 6,777 points.
Yields on 10-year US Treasury bonds rose as high as 2.884%, nearing Monday’s four-year peak of 2.885%, after the Bank of England said interest rates probably need to rise sooner than previously expected.
But they retreated as the selling intensified in the sharemarket and the yield was around 2.83% near 8am this morning.
The Aussie dollar again dipped under 78 US cents, losing half a per cent to trade around 77.82.
Comments from RBA Governor, Phil Lowe last night in which he firmly ruled out any immediate move to raise interest rates (indeed he made it clear a rise rise is a long way off in Australia) also helped kick the Aussie lower.
Gold though rose as investors sought something safer than equities. The Comex futures price was up around $US7 an ounce to $US1,321 an ounce just before 8 am.
A fall in oil prices won’t help and crude futures have lost all their gains for 2018 as traders fear surging US production will swamp the production cap organised by OPEC.
US oil futures fell more than 2%, or $US1.50 a barrel to $US60.30 a barrel at 8 am and it wouldn’t surprise if the price fell under the $US60 level in the next day. US oil production was 10.25 million barrels a day last week - an all time high and makes the US a bigger producer than the Saudis.
In Europe a late sell-off pushed major indices sharply lower, continuing the new surge of volatility which has alarmed investors this week after a long period of calm. Germany’s DAX index was down 3.1%, France’s CAC 40 was off 2.4%t, as was Spain’s Ibex 35. Italy’s FTSE MIB dropped by 2.3 per cent. The FTSE 100 fared slightly better, down 1.5%.
In Australia, investors again found themselves on the wrong side of the momentum dial (the second time this has happened since last Friday). The ASX 200 index rose 13 points, or 0.2%, to 5,890 while the broader All Ordinaries rose by the same point and percentage amount to 5,995 and the Australian dollar traded at US78.22¢.
Tokyo, Hong Kong, India and Singapore also rose yesterday - confidence that will be again tested today when trading resumes later today.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.