Dow Falls 430 Points as Bond Yields Surge and China Tensions Grow

  • Dow Falls 430 Points as Bond Yields Surge and China Tensions Grow

Dow Falls 430 Points as Bond Yields Surge and China Tensions Grow

A global measure of equity prices fell to a 1-year low on Thursday as Wall Street extended its October slide into a sixth session as investors feared an escalating USA trade war with China and risks from a recent climb in interest rates.

Although the losses were widespread, stocks that have been the biggest winners on the market, including technology companies and retailers, suffered steep declines. Meanwhile, the Nasdaq Composite dropped 315.97 points, or 4.08 percent, and the Dow Jones Industrial Average was down 831 points, or 3.15 percent.

What will fall hardest?

Wall Street stocks has plunged with major indices losing more than three percent in a sell-off prompted by the sudden jump in USA interest rates.

The S&P 500 fell nearly 92 points, or just over 3 percent, the biggest daily loss since February this year.

The rise in U.S. Treasury yields has been bolstered by good U.S. economic data that has reinforced expectations of multiple rate hikes over the next 12 months by the Federal Reserve.

Steep falls in US shares on Wednesday rolled into Asia and Europe on Thursday.

Asian markets tumbled on Thursday, after Wall Street slumped on a heavy selling of technology and internet stocks.

In the month before the S&P 500's correction in February, the 10-year yield rose 31 basis points, to 2.77 percent, making it an even bigger relative move since the yield at the time was at a lower starting point.

"What we're seeing here is the market positioning for potential lower growth". In 1987, stocks dropped more than 20 percent on a single day-Black Monday, Oct. 19-after a strong rally crashed into the Persian Gulf turmoil and trade deficits.

Luxury retailers tumbled. Tiffany plunged 10.2 percent to $110.38 and Ralph Lauren fell 8.4 percent to $116.96.

Markets have sold off in recent days as the rate on the 10-year Treasury note flirted with 3.2 percent - its highest level in seven years.

Rising costs, as inflation and borrowing rates pick up, could also be a worry for stock markets.

"The stock market in the US has started to take notice, and will continue to, particularly if the speed at which rates rise becomes alarming", Jeffrey Gundlach, chief executive of Doubleline Capital, told Reuters last week.

Globally, France's CAC 40 dropped 1 per cent and the DAX in Germany lost 0.6 per cent. Britain's FTSE 100 sank 1.3 per cent. In Asia, Tokyo's Nikkei 225 gave up 3.9 per cent and Hong Kong's Hang Seng index shed 3.5 per cent. Jitters about those companies have led to this short-term fall, too, while drops were felt throughout the market. It's fallen 6.3 per cent over the last five days.

In small-caps, the Russell 2000 closed at 1,575.91 for a loss of -45.95 points or -2.83%.

The Australian dollar slipped against major currencies, down to 70.7 United States cents, 53.6 British pence, 61.4 Euro cents and 79.5 Japanese yen.