He described the weakness among global shares as a combination of concerns over a potential interest rate hike by the US Federal Reserve in coming weeks and the European Central Bank sitting pat on monetary policy last week when further stimulus had been expected.
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The Dow Jones Industrial Average (NYSEARCA:DIA) fell nearly 400 points on Friday and 2.2% for the week. Energy was the only industry to increase, adding 0.7 percent as crude oil climbed 3.6 percent.
Remarks by a Fed bank president early Friday fueled growing speculation among traders that the central bank could be ready to lift its key interest rate for the first time since December 2015. The Dow Jones closed down 394.46 points, or 2.1%, at an intraday low of 18,085.45. The broader All Ordinaries Index is down 103.10 points or 1.90 percent to 5,337.40.
At 1200 AEST, the benchmark S&P/ASX 200 index was down 110.2 points, or 2.06 per cent, at 5,229.0 points.
It was the USA market’s worst performance since Britain voted to leave the European Union in late June 2016.
I had written a column two weeks ago outlining my view that USA equities faced a unsafe autumn and the S&P 500 index was set for a fall of 150 points. It marked a reversal for the pair, which led the market higher through July 15 with gains of more than 20 percent. The Nasdaq set record highs on two consecutive days earlier this week. The S&P 500 (NYSEARCA:SPY) and Nasdaq (NYSEARCA:QQQ) also fell sharply, down 2.4% each for the week. Boston Fed president Eric Rosengren, a historically dovish policymaker, said the USA central bank faced increasing risks if it waited too much longer to raise interest rates.
Asian shares skidded on Monday with investors rattled by rising bond yields and the talk the Fed might be serious about lifting U.S. interest rates as early as next week. Shares of the agribusiness are losing more than 1 percent.
It pays to remember that despite terror attacks, bombings, natural disasters, the GFC, the 1987 stock market crash, a recession, the introduction of the GST, several wars, a “Grexit” and ongoing issues in Europe and negative bond yields, the S&P/ASX 200 (PDF) has still managed to clock up an impressive compound annual return of 9.6% over the past 30 years, while global shares are up 7% over the same period. AT&T fell $1.48, or 3.6 percent, to $39.71, while Verizon slid $1.78, or 3.3 percent, to $51.82. Germany’s DAX fell 1 percent, while France’s CAC 40 lost 1.1 percent.
Automakers Toyota and Honda are also declining 1 percent each.
In Asia, concerns over N. Korea’s latest nuclear test hit stocks in S. Korea. It was even more alarming that the Volatility Index (VIX) spiked 38 per cent in a single trading session after the equities sell off accelerated.
The big four banks – Commonwealth Bank of Australia, Westpac, National Australia Bank and ANZ Bank – are lower in a range of 1.5 percent to 1.8 percent.
Wholesale gasoline fell 6 cents to $1.36 a gallon. Average yields were 10 per cent in February but have compressed to a mere six per cent now.
Gold stocks were among the biggest losers in the sector after spot gold slipped 0.2 per cent by 0228 GMT. Copper dipped a penny to $2.09 a pound.
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The Japanese market is notably lower, following the losses on Wall Street and on a stronger yen.
