Financial markets have that sinking feeling again

Financial markets have that sinking feeling again

Financial markets have that sinking feeling again

While the 1,175 point drop Monday in the Dow Jones industrial average might sound like a collapse, the decline was less than 5 percent.

By early afternoon the Dow Jones had tumbled by more than 600 points, while the S&P had shed 2 per cent. The Nasdaq plummeted 275 points to close at 6,777. The S&P 500 closed at 2,681.66 for a loss of -13.48 points or -0.50%.

The S&P 500 also plunged 3.7 percent by the end of the trading day for a new weekly low.

The global sell-off began last week after a solid U.S. jobs report fuelled expectations that the Federal Reserve would need to raise interest rates faster than expected, because of the strength of the economy.

Earlier, the Dow Jones Industrial Average fell by more than 1,000 points for the second time this week. Britain's FTSE 100 fell 1.5 percent and the French CAC 40 lost 2 percent.

The U.S. Treasury Secretary Steven Mnuchin said on Tuesday at a hearing of the House Financial Services Committee that the markets are "functioning very well", and the drop didn't pose any financial stability concerns.

Today's stock market news comes after three highly volatile sessions.

The Dow closed at 18,332.74 on November 8, the election day, in 2016.

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Oil prices fell to their lowest in seven weeks amid fears of rising global supplies after Iran announced plans to increase production and US crude output hit record highs.

Despite the heavy losses this week, the Dow remains up 36% since President Trump's election. The VIX closed up about 24 percent.

"Expect more volatility from here", Jeremy Hale, the head of asset allocation and global macro at Citi, said in a note on Thursday. That means they are in what is known on Wall Street as a "correction", their first in nearly two years.

THE Australian share market looks set to open around 1.5 per cent lower after Wall Street's key index again take a painful tumble.

He did "played Santa" for the market just around the Christmas past year, when he signed the GOP tax bill in law on Friday, capping off a months-long effort to pass the legislation through the Republican-controlled Congress on December 22.

Investors are weighing whether the sharp swings are the start of a deeper correction or just a temporary bump in the nine-year bull market, spurred by concerns over rising interest rates and bond yields. Those bets against market volatility blew up on Monday.

Like many others, BlackRock analysts described the rout as a buying opportunity, seeing the leveraged products moves as essentially driven by jitters over recent equity gains on one hand, and the possibility of higher interest rates on the other. European equities weren't spared, with the Euro Stoxx 50 volatility gauge spiking toward the highest since June 2016 - the month of the Brexit vote.

"This is just some healthy, and overdue, volatility to wring out any excess", he said.

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