US stocks plummet, pulling much of the global indices down with them
Oil prices have continued into their third day of decline as US stocks plunge at the fastest rate since 2016.
The US benchmark West Texas intermediate dropped 0.76 per cent to $63.66 a barrel for March. Global benchmark Brent Crude fell 0.89 per cent for April to $67.02 a barrel.
On Monday, the Dow Jones Industrial Average plummeted, 1,175 points – or 4.60 per cent – erasing virtually a year’s worth of gains.
The S&P 500 Index followed suit with a 4.10 per cent drop, while the Nasdaq dropped 3.78 per cent.
The Dow, which had repeatedly broken records since the 2016 US election, had fallen more than 600 points on Friday.
Monday’s drop marks its worst performance since 2008, leading some to wonder if global markets are seeing the type of freefall which followed the sub-prime mortgage crisis 10 years ago.
That led to a financial crisis which the world economy is only now starting to recover from.
The sudden resurgence of volatility in American equity markets has rattled Asia and Europe as commodity trading has also been adversely affected.
The Japanese benchmark Nikkei stock index fell nearly 1,200 points – or 4.8 per cent – by the end of trading on Tuesday.
In China, the Hang Seng index fell 1,650 points for a 5.12 per cent drop, while the benchmark Shanghai Composite plummeted 3.35 per cent to 3,37065.
In Europe, the London benchmark FTSE 100 fell 1.58 per cent while across the channel the CAC 40 fell 1.45 per cent.
The pummeling of US stocks comes less than a week after US President Donald Trump praised his administration’s handling of the economy citing the upward trajectory of the stock exchanges in the past 15 months.
It also comes as the chairmanship of the Federal Reserve changes hands with Janet Yellen stepping down and Trump’s nominee Jerome H. Powell taking over.
The Fed was expected to vote to raise interest rates again during the Federal Open Market Committee (FOMC) in mid-March.
But traders and analysts are wondering whether the sell-off in US indices of the past few days will persuade the FOMC to postpone their decision to May 2.
In the last Fed policy meeting chaired by Yellen on January 31, interest rates remain unchanged.
Read More: Trump on Fed chair: Status quo vs radical shift
By Firas Al-Atraqchi with inputs from Agencies