Wall Street slumped yesterday as anxieties about global economic growth smothered a short-lived, Federal Reserve-sparked rally in equity markets around the world.
The dollar gave up some gains from a remarkable three-month run-up and US benchmark bond yields touched one-year lows as investors shrugged off encouraging US jobless data.
Oil prices, deeply affected by the dollar’s value, tumbled to near a two-year low.
Energy stocks were big losers on Wall Street, where leading indices were off sharply at mid-session. The MSCI index of world stocks was off 0.9 per cent at 407.53.
The Dow Jones industrial average fell 311.82 points, or 1.83 per cent, to 16,682.4, the S&P 500 lost 36.73 points, or 1.87 per cent, to 1,932.16 and the Nasdaq Composite dropped 83.10 points, or 1.86 per cent, to 4,385.49.
The S&P Energy Index was down 3.5 per cent yesterday, a day after investors gave the US stock market its best day of the year as Fed meeting minutes suggested the central bank would not rush interest-rate hikes.
European shares hit a fresh two-month low as German exports fell 5.8 per cent in August, the worst decline since January 2009.
The data from Europe’s biggest economy fed anxieties about recession in the eurozone.
Brent oil fell below $90 a barrel. Prices have been hurt by a supply glut and concerns about global economic growth and are now down 20 per cent from June. Brent for November delivery was last down $1.16 at $90.22. US November crude lost $1.48 to $85.83.
The dollar dropped to a three-week low against the yen as investors took profit and pared back bullish bets on the greenback. The dollar was last off 0.20 per cent to 107.92 yen.
The Fed minutes showed officials were concerned about the impact of a stronger dollar on the profits of companies with an international presence, and about lackluster global growth, as they sought an eventual exit from record low rates.
The Fed was sending a warning shot to dollar bulls, who had lifted the greenback each week for three months, according to Andrew Wilkinson, chief market analyst at Interactive Brokers LLC in Greenwich, Connecticut.
Spot gold rose to its highest since September 23 at $1,233.20 an ounce early on Thursday and was trading up 0.3 per cent at $1,224.86.
US long-dated and benchmark Treasuries yields hit their lowest levels in over a year.
Yields on 30-year Treasury bonds hit 3.029 per cent, their lowest since May 2013, while benchmark 10-year yields hit 2.279 per cent, lowest since June 2013.
Benchmark 10-year US Treasury notes were last off 1/32 in price to yield 2.33 per cent. US 30-year Treasury bonds were last off 4/32 to yield 3.068 per cent.