Stock markets around the world fell yesterday on track for their longest weekly losing streak since 2013 while US Treasury prices rose along with demand for safer bets as better than expected US economic data did little to assuage anxiety over disappointing corporate profits and trade wars.
Wall Street plunged after earnings reports from Amazon.com and Alphabet rekindled a rush to dump technology and high-growth stocks. Both stocks had risen sharply on Thursday in advance of their earnings.
European and Asian stocks led the way lower. The pan-European STOXX 600 index lost 1.26 per cent and MSCI’s gauge of stocks across the globe shed 1.40 per cent.
The global index was more than 14 per cent below its record closing high reached on January 26 and was set for its fifth straight week of losses, which had not happened since May 2013.
Markets had only a temporary reprieve after data showed third-quarter US economic growth slowing less than expected as a tariff-related drop in soybean exports was partially offset by the strongest consumer spending in nearly four years. While US Treasury yields initially rose after the data, stock market volatility caused them to reverse course and fall to a three-week low of 3.074 per cent as stocks dropped.
Benchmark 10-year notes last rose 16/32 in price to yield 3.0774 per cent, from 3.136 per cent late on Thursday. The US dollar slid alongside stocks after having risen to a two-month high in morning trade after the GDP data.
The Dow Jones Industrial Average fell 339.24 points, or 1.36 per cent, to 24,645.31, the S&P 500 lost 48.88 points, or 1.81 per cent, to 2,656.69 and the Nasdaq Composite dropped 165.65 points, or 2.26 per cent, to 7,152.68.
The US dollar rose against a basket of major currencies after the US data.
The dollar index fell 0.17 per cent, with the euro up 0.07 per cent to $1.1382.
While a strong greenback benefits US assets, it also raises the cost of imports and exports, which hurts growth. The net effect tends to be neutral.
The Japanese yen strengthened 0.75 per cent versus the greenback at 111.57 per dollar, while sterling was last trading at $1.2832, up 0.13 percent on the day.
Doubt grew about whether the UK and the European Union can clinch a Brexit deal. Bloomberg, citing people familiar with the matter, reported yesterday that Brexit talks were on hold because Prime Minister Theresa May’s Cabinet was not close enough to agreement on how to proceed.
Bear markets – a price drop of 20 per cent or more from recent peaks – have increased across indexes and individual stocks since the start of this year.
Oil prices were headed for a third weekly loss after Saudi Arabia warned of oversupply and the slump in stock markets and concern about trade clouded the outlook for fuel demand.
US crude rose 0.01 percent to $67.34 per barrel and Brent was last up 0.4 per cent to $77.22 on the day.