BREAKING NEWS Car of missing North Iowa man contained human remains Full Story
STREAMING NOW: Watch Now

Why the US stock slump is hitting global markets hard

A sharp drop in US stocks is causing tremors thousands of miles away in Asia and Europe.Major share i...

Posted: Oct 11, 2018 12:42 PM
Updated: Oct 11, 2018 12:42 PM

A sharp drop in US stocks is causing tremors thousands of miles away in Asia and Europe.

Major share indexes in the United Kingdom, Germany and France fell more than 1% in early trading, following Wednesday's bloodbath in American markets, where the Dow plunged 3.2%.

Banking, finance and investments

Business, economy and trade

Financial markets and investing

Securities trading

Stock markets

Asia

Continents and regions

North America

The Americas

United States

Economic indicators

Economy and economic indicators

Stock indexes

China

East Asia

International trade

Trade and development

Hong Kong

Europe

The steepest losses in global stocks were in Asia, where some regional markets were already struggling. Stocks in Shanghai and Hong Kong entered bear market territory earlier this year.

Shanghai and Tokyo closed down 5.2% and almost 4%, respectively, on Thursday. Hong Kong's market dropped over 3.5%.

The US sell-off delivered a fresh hit to the confidence of Asia investors, said Jingyi Pan, a strategist at trading firm IG Markets.

Investors are very pessimistic about the Chinese market, which is being buffeted by the country's economic slowdown and the trade war with the United States, said Hao Hong, head of research at investment bank Bocom International.

Chinese tech stocks suffer

Just like in the United States, tech stocks were among the biggest losers. Chinese social media and gaming company Tencent (TCEHY) sank almost 6% on Thursday, while smartphone maker Xiaomi plummeted more than 8%.

Share prices in Asia are getting hurt by the recent rise in yields on US Treasury bonds, which are now near a seven-year high. Stocks tend to slump after sharp spikes in yields because that makes bonds, which are seen as safer assets, more appealing. Asian stocks are particularly vulnerable, since they're viewed by traders as riskier than US ones.

Higher borrowing costs also squeeze company profits.

Tech stocks are particularly vulnerable because they are among the most highly valued parts of the stock market, according to metrics widely used by investors. When investors get nervous, they are more likely to offload tech companies and move into assets that are seen as less risky, such as utility firms.

Hong Kong's market often reacts to movements in US Treasury yields because the Chinese territory, whose currency is pegged to the dollar, follows the US Federal Reserve's monetary policy, Hong said.

European fears

Shares in automakers were among the hardest hit in Europe. Fiat Chrysler (FCAU) and Volkswagen (VLKPF) both shed over 3% in early trade, while Daimler (DDAIF) dropped 2.6%.

Banks in the region also suffered shares price declines, with Santander (SAN) and HSBC (HSBC) each giving up more than 2%.

Kit Juckes, a strategist at Societe Generale, said that investors were paying more attention to local events in Europe, where Brexit and rising political risks in Italy have been front of mind.

In Germany, where exports drive the economy, intensifying global trade conflicts have been reflected in stocks. The benchmark Dax entered correction territory in February.

Carmakers such as BMW (BAMXF) have been slammed by the trade war with China.

What comes next

Investors have other reasons to fret, including a potential slowdown in global economic growth, the strengthening dollar and the next phase of the global trade war.

Money manager Fidelity argues that Asian stocks are still "compelling" for investors because stocks are generally cheaper there than in the United States. They could rise in the long term as Asia becomes wealthier.

"The long-term fundamental story for Asia led by rising domestic consumption remains unchanged," said Medha Samant, investment director for Asian equities at Fidelity International.

Juckes argued that US markets were playing catch up to trends that have already affected global currencies and emerging markets.

"For much of 2018, the US economy has been oblivious to a turn in the global economic cycle," he said. "This week has seen the S&P, and the Nasdaq, sit up and pay attention to what's going on."

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 135372

Reported Deaths: 2406
CountyConfirmedDeaths
Hennepin34290991
Ramsey14168361
Dakota9897138
Anoka8872150
Washington598672
Stearns588344
Scott342934
Olmsted327730
St. Louis302669
Wright254115
Clay232843
Nobles227616
Blue Earth20457
Carver18207
Sherburne171122
Kandiyohi17055
Rice164810
Mower152917
Winona126019
Chisago10402
Crow Wing103522
Lyon9766
Benton9509
Waseca9299
Beltrami9017
Otter Tail8737
Todd8266
Steele7613
Morrison7429
Nicollet73917
Itasca73617
Douglas7083
Freeborn6844
Polk6734
Le Sueur6315
Martin61317
McLeod6024
Goodhue59711
Watonwan5794
Becker5754
Isanti5615
Pine5490
Carlton4441
Chippewa4443
Mille Lacs41315
Hubbard3962
Dodge3940
Wabasha3840
Cass3775
Pipestone35117
Rock3404
Meeker3313
Brown3243
Unassigned29253
Yellow Medicine2856
Murray2833
Cottonwood2820
Redwood28111
Roseau2650
Fillmore2640
Renville25611
Sibley2543
Wadena2393
Faribault2350
Jackson2151
Kanabec21510
Swift2071
Houston2061
Pennington1951
Lincoln1840
Stevens1841
Aitkin1792
Koochiching1704
Pope1610
Big Stone1410
Lac qui Parle1403
Wilkin1374
Marshall1261
Lake1230
Norman1170
Mahnomen1162
Clearwater1140
Grant994
Red Lake782
Traverse570
Lake of the Woods441
Kittson420
Cook170

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 116514

Reported Deaths: 1643
CountyConfirmedDeaths
Polk19024288
Woodbury724797
Johnson586230
Black Hawk562698
Linn5591132
Dubuque521157
Scott456639
Story401018
Dallas346344
Pottawattamie324744
Sioux244716
Buena Vista226112
Marshall202036
Webster184415
Plymouth166728
Wapello153062
Clinton149226
Muscatine147758
Des Moines139610
Cerro Gordo137726
Crawford136114
Warren12617
Carroll115612
Jasper111234
Henry10675
Marion101810
Lee95610
Tama94837
Delaware78013
Dickinson7417
Wright7271
Boone7239
Mahaska69724
Bremer6779
Washington66211
Harrison65815
Jackson6333
Benton5902
Lyon5537
Clay5354
Louisa52315
Winnebago49719
Hardin4777
Winneshiek4779
Hamilton4754
Cedar4746
Kossuth4690
Poweshiek45911
Buchanan4544
Jones4474
Floyd43711
Emmet43019
Clayton4233
Iowa4109
Page4060
Mills4053
Cherokee4032
Sac3994
Guthrie39515
Cass3903
Butler3832
Fayette3814
Franklin38118
Shelby3732
Allamakee3719
Madison3623
Chickasaw3611
Clarke3523
Humboldt3253
Hancock3204
Palo Alto3142
Grundy3115
Calhoun3094
Osceola2851
Mitchell2811
Howard2709
Monroe25911
Monona2451
Taylor2432
Jefferson2391
Union2314
Appanoose2273
Pocahontas2262
Fremont2061
Lucas2056
Ida1932
Greene1870
Van Buren1802
Davis1784
Montgomery1787
Adair1701
Keokuk1611
Decatur1500
Audubon1481
Worth1450
Wayne1213
Ringgold882
Adams810
Unassigned110
Rochester
Clear
28° wxIcon
Hi: 44° Lo: 26°
Feels Like: 15°
Mason City
Clear
30° wxIcon
Hi: 46° Lo: 27°
Feels Like: 18°
Albert Lea
Clear
30° wxIcon
Hi: 45° Lo: 26°
Feels Like: 22°
Austin
Clear
28° wxIcon
Hi: 46° Lo: 27°
Feels Like: 20°
Charles City
Clear
27° wxIcon
Hi: 47° Lo: 29°
Feels Like: 18°
Tracking plenty of sunshine through the week!
KIMT Radar
KIMT Eye in the sky

Community Events