Stocks on major markets fell yesterday, with an index of global equities hitting a seven-month low, and oil slumped to a four-year low as worries about weak worldwide economic growth continued to take a toll on investor confidence.
Most major markets declined about one per cent yesterday, though the US benchmark S&P 500 index fell just 0.2 per cent, while the tech-heavy Nasdaq experienced the biggest losses on Wall Street.
Investors have scrambled to reduce big bets in stocks and other risky assets after reaping big gains from a rally in major world equity markets that has only seen brief interruptions in the past three years.
Assets tied to expectations for improved growth have been hit by a recent raft of weak indicators from Europe and China at a time when other big economies, including Japan and Brazil, face their own hardships and as the US Federal Reserve is expected to reduce monetary accommodation in the coming months.
“In a vacuum of policy response, investors are selling first and asking questions later,” said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Asset Management, which has about $924 billion in assets under management.
“It smells like there is a high degree of involvement from systematic traders, rather than fundamental traders. The magnitude of the move has been disproportionate to the change in the fundamentals,” he said.
The Dow Jones industrial average fell 9.7 points, or 0.06 percent, to 16,649.55, the S&P 500 lost 6.04 points, or 0.31 per cent, to 1,922.17, and the Nasdaq Composite dropped 57.72 points, or 1.32 per cent, to 4,320.62.
In a sign of increased volatility, the CBOE Volatility Index , or VIX, the market’s favoured gauge of Wall Street anxiety, touched a high of 22.06 yesterday, its highest intraday level since December 2012, as more investors paid up for protection against further declines. The VIX pared gains in the afternoon, trading at 19.74.
Concerns about global growth have hit oil prices hard, though they rose slightly in late afternoon trading. Brent crude oil was up at $90.17 a barrel, after touching its lowest level since December 2010 at $88.11. US November crude was flat at $85.80.
The risk aversion has boosted buying in safe-haven government debt. Lipper data shows US-based taxable bond funds attracted $12.7 billion in inflows for the week ended Wednesday.