Stock indexes worldwide tumbled for the third straight session yesterday on fears of slowing global growth, with particular concern around the health of the banking sector, while benchmark US Treasury yields hit fresh one-year lows.
The European banking index fell 4.6 per cent after sinking 5.6 per cent on Monday on fears of worsening bank profitability and capital strength from sustained low interest rates.
Deutsche Bank shares fell 4.1 per cent after slumping 9.5 per cent on Monday on concerns about its ability to maintain bond payments. Shares of US banks also stumbled, with the S&P financial index last down over one per cent.
US shares recovered ground on improvement in technology stocks, but all three major US indexes were flat to lower, with losses being felt in energy and financial stocks. Stocks lost more than one per cent Monday.
The FTSEurofirst 300 index slumped but was off its lowest level since September 2013, which was touched earlier in the session.
Turmoil in Asia set the tone for the session, with yields on longer-term Japanese bonds falling below zero for the first time and Japan’s Nikkei plummeting 5.4 per cent. Chinese markets are closed through the week for the Lunar New Year.
MSCI’s all-country world equity index was last down 2.25 points, or 0.62 per cent, at 358.56.
The Dow Jones industrial average was last down 32.19 points, or 0.2 per cent, at 15,994.86. The S&P 500 was down 1.29 points, or 0.07 per cent, at 1,852.15. The Nasdaq Composite was up 1.77 points, or 0.04 per cent, at 4,285.53.
The FTSEurofirst 300 index ended down 1.4 per cent at 1,222.11.
Yields on benchmark 10-year Treasury notes, known for their relative safety, extended Monday’s declines to hit 1.682 per cent, their lowest in a year. The notes were last up 3/32 in price to yield 1.7226, from a yield of 1.735 per cent late Monday.
Gold, another safe-haven asset, rose in price and was just below the seven-and-a-half-month high struck the previous day.
Oil prices fell, dragged lower by the broad decline across major financial markets and by a growing expectation that global demand will not grow quickly enough to erase the overhang of unwanted crude any time soon.
Brent crude was last down 89 cents at $32 a barrel. US crude was last down 24 cents at $29.46 per barrel.
The US dollar extended its drop against the safe-haven Japanese yen, hitting its lowest against the yen since November 2014 for the second straight session. The concerns also caused the Mexican peso to hit an all-time low against the dollar.
Spot gold prices were last up $2.2 at $1,192.96 an ounce.